O R D E R
By Dr. K. Radhakrishnan Nair, Member :
Complainant case is that her mother was a policy holder of the 1st opposite party. It was a Life Insurance Policy bearing No.G0000253 & Certificate of Insurance bearing No.003-569757. The risk in the policy commenced on 28/08/13. On 10/09/2013 policy holder died due to Cardiac arrest. Complainant is the nominee. The insurance claim lodged before the 1st opposite party for the death benefits was repudiated on the ground that the deceased was suffering from various diseases prior to the proposal for insurance and the same were not disclosed. As such it suffers from nondisclosure of material facts and the contract has become void ab-initio as alleged by the 1st opposite party.
2) Aggrieved by the above act a lawyer notice was sent on 18/01/2014 to the 1st opposite party. It was replied by their letter dtd. 04/02/14 raising untenable contentions repeating the same while repudiating the claim. Complainant states that the entire efforts are taken by the officers of the opposite parties to underwrite the above business to meet their target of procuring business with fraudulent and dishonest intention to mislead the complainant. Complainant had disclosed all the facts. In fact the opposite parties have concealed those facts and issued the policy as if everything all right. They have never explained the details of coverage. The officers of the opposite party made to believe Smt. Pankajam the policy holder that the declaration form and other papers are just for formality and they did not make her aware Smt. Pankajam regarding the contents of the declaration from and other documents got signed in it. Complainant further allege that officers of the opposite party cheated and made to sign her in documents and forms without making her aware of the contents there of. For which they were duty bound being placed in a fiduciary relationship with the deceased. The officers of the opposite parties to meet their target, willfully suppressed the fact of illness and issued the policy. Had they explained everything including non-coverage of pre-existing illness she should not have signed the declaration and other papers. After grabbing the premium and issued the policy the genuine death claim cannot be repudiated. If repudiated the same will tentamounts deficiency in service. As there is deficiency in service on the part of opposite parties, the complaint may be allowed directing the opposite parties to pay Rs.1,00,000/- (Rupees One lakh only) being the policy limit with 12% interest from 23/10/2013 and to pay Rs.50,000/- (Rupees Fifty thousand only) towards compensation for mental agony and other sufferings and also Rs.10,000/- towards cost.
3) Admitted the case. Issued notice to opposite parties. They appeared through counsel and filed version.
4) According to the opposite parties the compliant is false, frivolous and vexatious with a malafide intention to get undue benefits. Suppression of material facts is fatal. If the life assured had disclosed her past medical history the opposite party would not have issued the policy in dispute. Having issued the policy, the complainant is bound by the terms and conditions of policy and 1st opposite party is not liable to cancel or return the policy amount paid by him to the opposite party. The opposite party further submits that the member form was submitted on 28/08/2013, thereby affirming that the terms and conditions of the policy have been duly read and understood by the complainant and that she is well acquainted with the features/benefit payable under the policy. Based on the declaration given by the complainant only the said policy was issued. The opposite parties repudiated the claim of the complainant on the grounds of non-disclosure of material facts pertaining to the medical history of the deceased life assured which is the root principle under the contract of insurance. She had also violated the declaration. The said repudiation was duly conveyed to the complainant vide letter dtd. 20/11/2013. It can be seen that the above repudiation is just, proper, legal, valid and made on the grounds of nondisclosure of material facts. Therefore it is submitted by the opposite party that there is no deficiency in service or unfair trade practice. Complaint may kindly dismissed with compensatory cost to the opposite parties.
5) Then the case posted for evidence. The points for consideration are the following.
a) Is there is any deficiency of service on the part of opposite
parties ?
b) If yes, cost and relief ?
6) Appreciation of Evidence :
Both parties filed proof affidavits, documents, argument notes and the case was finally heard in detail. The documents filed by the complainant are marked as Ext. P1 to P7.
- Ext. P1 is the Membership form and Declaration of Good Health (copy)
- Ext. P2 is the Repudiation Letter dtd. 20/11/2013
- Ext. P3 is the Certificate of Insurance
- Ext. P4 is the Death Certificate
- Ext. P5 is the Lawyer Notice dtd. 18/01/2014.
- Ext. P6 is the Postal Receipt
- Ext. P7 is the Reply letter dtd. 04/02/2014.
From the side of opposite parties five documents were produced and marked as Exts. R1 to R5.
- Ext. R1 is the Master Policy Documents
- Ext. R2 is the Claim Investigation Report
- Ext. R3 is the Discharge Card from the Medical College Chest Hospital
- Ext. R4 is the Membership Form (Original)
- Ext. R5 is the Repudiation letter dtd. 20/11/2013.
7) Complainant was examined and his deposition is marked as Ext. PW1. From the side of opposite parties a representative was also examined and his deposition is marked as Ext. RW1. While examining the documents, proof affidavits and argument notes assiduously with an open mind we are convinced that there were underwriting lapses on the part of opposite parties 1 and 2.
8) To procure a business in the changed scenario of privatization liberalization and globalization as well as in the financial sector reforms an unprecedented competition was prevailing in the insurance sector. Though a sound underwriting practices were visualized while keeping the interests of the consumers well protected, it is reported that the desired goal could not be achieved. Insurance Density and Insurance penetration were abysmally low due to the lack of Insurance Literacy. It is observed that insurance products are still sold only not bought. If anybody is coming forward for an insurance product for buying the treatment towards such customers will be different being coming under “adverse selection”.
9) In the instant case also we the Commission is very well convinced that the policy was issued to the complainant who seems to be not at all an informed customer. Since the policy holder is no more we cannot insist for any primary evidence. The solemn statement of the complainant needs to be believed in the absence of contra evidence. There is no clear cut evidence from the side of opposite parties that she the complainant had been served the terms and conditions to become an informed customer. Complainant has reiterated that she had conveyed to the officers with regard to her illness. If they had any doubt, they could have done a premedical check-up. It has become a routine affair on the part of certain insurers to repudiate the genuine claim on the ground of life style diseases like hypertension and Diabetics though those diseases are not requiring any long treatment or surgery. In the PW1 deposition the solemn statements given in the affidavit is well corroborated to the effect that the Declaration Form was given duly filled and the policy holder had only signed. She had studied only up to second standard and the complainant had studied up to 8th standard. They do not know any English complainant has also deposed that there was no suppression of any facts especially about the illness. The premium amount was given after fully communicating the illness. The deposition of RW1 does not have much probation value in the instant case. He himself has admitted that he has no awareness personally with the facts of the case. He is a non-staff recently joined and depose facts as revealed from the file.
10) In the circumstances, this Commission is convinced that there is deficiency in service on the part of opposite parties 1 and 2. Complainant has proved her case to the objective satisfaction of this Commission. The 2nd opposite party and his agency force while negotiating and completing the underwriting process need to take adequate care to explore all the facts that are material to the issuance of the policy. In the instant case the Commission cannot believe that the uninformed customer suppressed any facts which is exclusively in the domain of the policy holder. Whereas, the so called facts alleged to be material could have obtained or known to the opposite party without much effort. We give a verdict in favour of the complainant.
Relief and cost :
Having found that there is deficiency in service by denying a genuine claim we direct the 1st opposite party to pay Rs.1,00,000/- (Rupees One lakh only) being the maximum liability under the policy with 12% interest from the date of petition and also Rs.5,000/-(Rupees Five thousand only) towards cost. Complaint allowed accordingly.
Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Commission this the 30th day of November 2020.
Sd/- Sd/- Sd/-
Sreeja S Dr. K. Radhakrishnan Nair C.T. Sabu
Member Member President
Appendix
Complainant’s Exhibits :
Ext. P1 Membership form and Declaration of Good Health (copy)
Ext. P2 Repudiation Letter dtd. 20/11/2013
Ext. P3 Certificate of Insurance
Ext. P4 Death Certificate
Ext. P5 Lawyer Notice dtd. 18/01/2014.
Ext. P6 Postal Receipt
Ext. P7 Reply letter dtd. 04/02/2014.
Complainant’s Witness :
PW 1 Raji
Opposite Parties’ Exhibits :
Ext. R1 Master Policy Documents
Ext. R2 Claim Investigation Report
Ext. R3 Discharge Card from the Medical College Chest Hospital
Ext. R4 Membership Form (Original)
Ext. R5 Repudiation letter dtd. 20/11/2013.
Opposite Parties Witness :
RW1 Tojan Abraham
Id/-
Member
