Punjab

Ludhiana

CC/20/135

Amandeep Kaur - Complainant(s)

Versus

ICICI Prudential Life Ins.Co.Ltd - Opp.Party(s)

PankajKaushik

03 Oct 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:135 dated 11.08.2020.                                                         Date of decision: 03.10.2023.

 

Amandeep Kaur W/o. Sh. Okar Singh, r/o. H. No.209, Jogi Basti, Dharamkot, Near Basi Jewellers, Moga-142042.                                                                                                                                                          ..…Complainant

                                                Versus

1. ICICI Prudential Life Insurance Co. ltd. Through its Managing Director having its Regd. Office at Unit No.1 A & 2A, Raheja Tipco Plaza, Rani Sati Marg, Malad (East), Mumbai-400097.
2. ICICI Prudential Life Insurance Co. Ltd., Through its Manager having its office at Main Ferozepur Road, Ludhiana (Punjab)-141001.                                                                                              …..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Manjeet Singh, Advocate.

For OPs                          :         Sh. V.S. Mand, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                In brief, the facts of the case are that the husband of the complainant Sh. Okar Singh (hereinafter called as DLA) purchased a Life Insurance Policy i.e. ICICI Pru iProtect Smart policy No.22157581 for a period of 36 years commencing from 04.04.2018 to 04.04.2054 to the tune of Rs.54,00,000/- from opposite party No.2 in which the complainant was a nominee. The DLA paid the premium as per premium schedule and also submitted proposal form filled by the representative of the opposite parties. The complainant further stated that the life assured died on 14.11.2019 and she submitted claim with opposite parties by submitting all the required documents. She also visited office of opposite party No.2 but she was told that her case is under process and insurance amount shall be released to her. The complainant also sent a legal notice dated 04.05.2020 upon the opposite parties. The opposite parties vide their reply dated 03.07.2020 intimated a cancellation letter dated 06.12.2020 stating that the policy of LA has been cancelled on the ground of concealment of fact that the LA was holding other life insurance policies at the time of opting for the instant policy and they have refunded the premium. According to the complainant she has not received any cancellation letter dated December 2020 nor she received any refund from the opposite parties. The complainant further stated that she has suffered mental tension, agony, harassment etc. due to deficiency in service and unfair trade practice on the part of the opposite parties for which she is entitled to compensation. In the end, the complainant has prayed for issuing direction to the opposite parties to release the insured amount on account of death of life assured along with interest as well as compensation of Rs.5,00,000/- and litigation expenses of Rs.1,00,000/-2.                   Upon notice, the opposite parties filed joint written statement and by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint, suppression of material facts by the complainant; lack of jurisdiction and cause of action. The opposite parties stated that they conducted a pre-claim investigation to determine the bonafides of the information furnished by the life assured in the proposal form in accordance with section 45 of the Insurance Act, 1938 and found that the life assured had withheld that he had availed insurance policies to the tune of Rs.65 Lacks prior to availing the subject policy and further the life assured in total had availed multiple insurance policies from various companies to the tune of Rs.3 Crores in a period of 2 years. As such, the life assured had deliberately and consciously withheld the material information regarding prior insurance policy taken by him. Moreover, the life assured in accordance to the income declared by him in proposal form and financial undertaking guidelines of the company was eligible only up to 71 Lakhs. Even a show cause notice dated 13.12.2019 was sent to the life assured but no reply was given by him and as such, the policy was cancelled on 29.12.2019 and the premium was sent via cheque along with null and void letter on 29.12.2019. The opposite parties further averred that they issued the insurance policy to the life assured on the basis of information provided in Customer Declaration Form (CDF) and a Human Life Value (HLV) approach regarding method of calculating the amount of life insurance, a life will need based on the financial loss the family would incur if the insured person were to pass away during the term of the policy, which is usually calculated by taking into account a number of factors including but not limited to the insured individual’s age, gender, planned retirement age, occupation, annual wage, employment benefits as well as personal and financial information of the spouse and/or dependent children. The life assured submitted his ITR proof at proposal stage and as per underwriting guidelines and calculations, the life assured was financially only eligible for a cover of 71 Lakhs. The calculation is reproduced as under:-

          Age of the customer                  -        39 years

          Income multiplier as per age    -        20 times

          Sum assured                                      -        Rs.54,00,000/-

          Financials as per ITR

                   Year 16-17  - Rs.3,16,840/-

                   Year 18-19  - Rs.4,02,560/-

          Average income                       -        359700

          Formulae    -        359700 x 20 = Rs.71,00,000/-

          Total sum assured proposed by ICICI Prudential at proposal stage :

Rs.54 Lakhs

Reference: Income Multiplier Grid:

Age (Years)	Income Multiplier
18-35	25
36-45	20
46-50	15
51-60	10
61-65	5(Subject to profile)

In case customer would have disclosed about 65 Lakhs of additional/earlier insurance, then total sum assured would be – 54 Lakhs + 65 Lakhs = Rs.1.19 Crore. The opposite parties further stated that the policy would not have been issued had the life assured disclosed about his previous  insurance policies as the customer was financially not eligible for the same.

                   Under the column Facts of the case, the opposite parties have stated that they received a duly filled online sell proposal form bearing No.OS0881256 along with duly filled and signed Customer Declaration Form (CDF) from Okar Singh for an ICICI Pru iProtect Smart (T51) for an annual premium of Rs.28,580/-, on the basis of which, the opposite parties issued policy No.22157581 on 04.04.2018 to the life assured with the following details:-        

Application Number	OS0881256
Policy Number	22157581
Policy Plan	ICICI PruiProtect Smart T51
Policy Holder	Okar Singh
Life Assured	Okar Singh
Proposal Received Date	29 March 2018
Risk Commencement Date	04 April 2018
Policy Issue Date	04 April 2018
Total Premium Paid	Rs.28580/-
Policy Dispatch date	Dispatch Date 14/04/2018 Received date 24/04/2018 AWB ED757221825IN Mode Speed Post

 

Moreover, the DLA had answered the relevant questions regarding his prior insurance policies and his income in the proposal form, which is reproduced as under:-

Previous Policy Details Do you hold any other insurance policy (ies) – NO

 

According to the opposite parties, the present case is a classic case of an external fraud on the company. During the investigation, they revealed the astonishing facts, which are reproduced as under:-

g)      The life assured has provided incorrect information about the other insurance policies. He along with other have deliberately suppressed material information has have tried to fraudulently get money from various insurance companies.

h)      That the life assured had taken around 11 policies with a total sum assured of Rs.3 Crore whereas as per the underwriting rules, it was opined that the life assured was financially eligible for a total sum assured of Rs.71 lakh only on the basis of the two ITRs submitted by the life assured.

i)       Further during one of the investigation findings done by Bajaj Allianz, it is also suspected that the life assured is alive even after the date of death as mentioned by the life assured and a fraud has been orchestrated.

j)       No claim has been submitted with the respondent company till date.

k)       No medical document in which death is declared has been submitting with the company till date.

l)       No medical attendant’s certificate, wherein the doctor who has attended last/has declared death has been submitted till date.

The opposite parties also submitted the detail of the policies purchased by the insured before the policy in question, which is reproduced as under:-

Company Name	Policy Number	Sum Assured	Life Assured	RCD	Status of the Policy
Bajaj Allianz	330580012	3500000	Okar Singh	28-Oct-16	Void Ab Initio
Exide Life	3434963	2600000	Okar Singh	05-Nov-16	Repudiation
	Total	Rs.6100000

 

Moreover, the life assured purchased insurance policies, which are reproduced as under:-

Sr. No.	Company Name	Policy Number	Sum Assured	Life Assured	RCD	Status of the Policy
1.	Bajaj Allianz	330580012	3500000	Okar Singh	28-Oct-16	Void Ab Initio
2.	Exide Life	3434963	2600000	Okar Singh	05-Nov-16	Repudiation
3.	ICICI Prudential	22157581	5400000	Okar Singh	04-Apr-18	Null and void
4.	SBI	2F358600308	3500000	Okar Singh	21-Jul-18	Death claim not yet intimated as on 02.08.2018
5.	Canara HSBC	1500763011	3500000	Okar Singh	24-Aug-18	Case dropped as suspected fraud
6.	Max Life	521251751	544000	Okar Singh	29-Oct-18	Transfer to external system
7.	Max Life	564589976	3000000	Okar Singh	02-Nov-18	Transfer to external system
8.	Exide life	3434963	5000000	Okar Singh	17-Nov-18	Repudiation
9.	RNLIC	53344614	164729	Okar Singh	17-Nov-18	Decline
10.	RNLIC	53348356	3500000	Okar Singh	30-Nov-18	Decline
11.	Bajaj Allianz	352623201	1000000	Okar Singh	04-Dec-18	Lapse
Total			Rs.3,17,08,729.00

         

The opposite parties further stated that on investigation and industry check undertaken by them, it was informed by Bajaj Allianz that they had received a death claim intimation from the complainant informing that the life assured had died on 14.11.2019. However, during the investigation undertaken by Bajaj, the life assured was found alive which is a case of gross and magnanimous attempt of fraud played by the life assured in connivance with the complainant and other perpetrators to extort unnecessary moneys from the insurance companies. Moreover, since the life assured had withheld material information from the company in the proposal form, a show cause notice dated 13.12.2019 was sent to the life assured to which no reply was received by the company from the life assured till date. As the life assured did not provide any satisfactory reasons or explanation to the show cause sent by the company dated 13.12.2019, the opposite parties duly terminated and declared the policy null and void on the grounds of material non-disclosure and fraud on the part of the life assured and communicated their decision to terminate the policy vide letter dated 29.12.2019 and refunded the premium of Rs.28,580/- paid by the life assured vide cheque bearing No.481818 dated 13.12.2019 but the said cheque was not encashed. The opposite parties further stated that the company is willing to release the refund of premium amount to the complainant.  

                   On merits, the opposite parties averred that no death claim has been received from the complainant or any other person. It was only through legal notice dated 04.05.2020, it came to their knowledge that the life assured had passed away. The opposite parties have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                In support of her claim, the complainant tendered her affidavit Ex. CA in which she reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of declaration/proposal form, Ex. C2 is the copy of insurance policy, Ex. C3 is the copy of death certificate of Okar Singh, Ex. C4 is the copy of legal notice dated 04.05.2020, Ex. C5 is the copy of email dated 03.07.2020 and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Sh. Pradeep Sawant, Authorized representative of the opposite parties along with documents Ex. OP1/1 is the copy of customer declaration, Ex. OP1/2 is the copy of insurance policy, Ex. OP1/3 is the copy of policy documents, Ex. OP1/4 is the copy of email correspondence, Ex. OP1/5 is the copy of show cause notice dated 13.12.2019 of the opposite parties, Ex. OP1/6 is the copy of cancellation letter dated 06.12.2020, Ex. OP1/7 is the copy of reply dated 17.07.2020 to the legal notice dated 04.05.2020  and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties. We have also gone through the written arguments submitted by the opposite parties.

6.                 The complainant, being wife and nominee of DLA Okar Singh, has raised a grievance with regard to repudiation of death claim and cancellation of the life insurance policy. Admittedly, DLA was a holder of ICICI Pru iProtect Smart Life Insurance Policy Ex. C2 = Ex. OP1/3 (a Non-Participant, Non-Linked Term Insurance Plan) for a sum assured of Rs.54 Lac having a validity of 36 years commencing from 04.04.2018 to 04.04.2054. A yearly premium of Rs.13,110/- was payable. LA has obtained this policy by submitting an application form Ex. OP1/2 along with customer declaration form Ex. C1 = Ex. OP1/1 wherein he has answered the relevant questions with regarding to holding of earlier insurance policies and income as under:-

Previous Policy Details Do you hold any other insurance policy (ies) – NO

 

He also submitted the following declaration with regard to information furnished by him in the said form:-

“…I/We have fully understood the nature of the questions including health related questions and the importance of disclosing all material information while answering such questions…”

“…I/We undertake to notify the Company of any change in the information given by me/us in the proposal form with respect to the Life/Lives to be Assured subsequent to the signing of this proposal form and before the receipt of the policy document…”

7.                Acting upon the information so received by the opposite parties, the insurance policy was issued and the policy documents Ex. OP1/3 were sent to the registered address of the DLA. However, the opposite parties initiated a pre-claim investigation in order to check the veracity of facts and information and after careful scrutiny of the information and documents, it transpired that DLA had deliberately and with malafide intention withheld the information with regard to availing of multiple insurance policies of various companies to the tune of Rs.3 Crore in the last two years. Further the DLA had submitted ITR for the year 2016-17 and 2018-19 showing the average income to be Rs.3,59,700/-  and he was eligible for a coverage of Rs.71 Lacs only. Accordingly, a show cause 7 days notice dated 13.12.2019 Ex. OP1/5 was issued to the DLA calling upon him to visit nearest branch to submit response failing which the opposite parties would constrained to cancel the policy and refund the premiums paid by the DLA but no response was received by the opposite parties. On 28.12.2019, the insurance company cancelled the policy vide letter dated 06.12.2020 Ex. OP1/6 and an amount of Rs.28,580/- was refunded vide cheque No.481818 dated 13.12.2019. The operative part of the cancellation letter is as under:-

“The Company conducted checks to verify on the bonafides of the details mentioned by life assured in the proposal form. During our checks it was noted that life assured had availed insurance cover from other insurance Companies, prior to availing insurance cover from us.

While underwriting the above proposal, the Company believed/relied on the replies to specific questions (reproduced below) in the proposal for insurance dated March 29, 2018 which were answered by you as given below:

Previous Policy Details (Page 1 of the proposal form)
Do you hold any Life Insurance Policy (ies) other than ICICI Prudential?	NO

Had the response to the above stated question been responded truly, correctly and completely by you in the proposal for insurance, the said proposal would not have been accepted by the Company and as per Company's underwriting guidelines, the policy would not have been issued.

It is evident that the Company has been misled to issue the said policy by suppressing material facts. However we are refunding the premiums paid under the said policy via Cheque No. 481818 dated December 31, 2019 amounting to Rs. 28580/- (Rupees Twenty Eight Thousand Five Hundred Eighty Only) enclosed with this letter.

We are therefore constrained to cancel the policy with immediate effect and all benefits, rights and interest under the said policy cease to exist.”

8.                Perusal of record shows that DLA stated to have been died on account of “natural death” on 14.11.2019 i.e. after about 19 months from the issuance of the policy. Death certificate of DLA is Ex. C3. It is pertinent to mention that DLA was born on 01.01.1978 and at the time of obtaining the policy he was aged about 39 years and at the time of death, he was about 41 years of age. The complainant did not elaborate any facts and circumstances leading to natural death of DLA in a comparatively younger age nor any affidavit of herself or of any attendant was produced in whose presence DLA breathed his last. Even no medical document was brought on record to show that DLA was taken to some hospital before he was declared dead or brought dead. The complainant was required to dispel suspicious with regard to “natural death” of DLA.

9.                 It is strange that the complainant did not file formal death claim with the opposite parties. Even in the legal notice or the complaint, she has maintained stoic silence qua lodging of death claim. On the other hand, it is the specific stand of the opposite parties that they came to know about the death of DLA  on the receipt of legal notice dated 04.05.2020 (Ex.  C4) only and Ex. C5 was sent to the complainant informing about the events that had already taken place with regard to cancellation of the policy and refund of the premium. The opposite parties in their written statement specifically provided the details of the previous multiple insurance policies held by the DLA and have specifically pleaded the execution of well planned external fraud by the complainant or DLA but the complainant did not opt to file any rejoinder to the contents of the written statement. Even in her affidavit, the facts which were specifically in the knowledge of the complainant were not divulged raising a serious doubt with regard to bonafide of the claim.

10.              It is evident that the repudiation in the present case was within the two years from the commencement of the insurance cover which leads to invoking of Section 45 of the Insurance Act, which reads as under:-

“Section 45

(1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

Explanation I. -For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy: -

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

(d) any such act or omission as the law specially declares to be fraudulent.

Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

(3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

Explanation. -A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

(4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”

 

11.              It is settled proposition of law that the contract of insurance is based upon the principle of  ‘Uberrima Fides’ and both insurer and insured are under legal obligation to provide the correct and authenticated information at the time of the policy. The information regarding holding of earlier prior insurance policies, age, proof of income and medical history are some of the criteria which are to be disclosed truthfully by the proposer. In the present case, the opposite parties had sought intimation from the DLA with respect of previous multiple policies which was not disclosed and suppressed the material facts.

12.              In its judgment Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided n 10.07.2009, the Hon’ble Supreme Court of India has held that if there was clear suppression of material facts in regard to the health of the insured, the insurer was fully justified in repudiating the insurance contract. The Hon’ble Supreme Court of India has further held in Reliance life Insurance Co. Ltd. and others Vs Rekhaben Nareshbhai Rathod in 2019 (2) R.C.R. (Civil) 909 that two months prior to policy obtained from appellant insured obtained policy from another company and this fact was not disclosed by the insured. Repudiation was made within two years period from commencement of insurance cover. The proposer was aware of contents of form that he was required to fill and disclosure of material for assessment of risk which was being taken by insurer which entitled the insurer to repudiate the claim.  

13.              As a result of above discussion, the complaint fails and the same is hereby dismissed. However, there shall be no order as to costs. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

14.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

                             (Monika Bhagat)                        (Sanjeev Batra)                                                Member                                      President         

 

Announced in Open Commission.

Dated:03.10.2023.

Gobind Ram.