Andhra Pradesh

Chittoor-II at triputi

CC/97/2019

K.Venkatamma, W/o. Late K.Bhaskar Reddy - Complainant(s)

Versus

M/s Shriram Life Insurance Co. Ltd., Rep. by its Branch Manager, - Opp.Party(s)

K.Narayana

05 Jul 2022

ORDER

Filing date: 14.10.2019

Order date: 05.07.2022

 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-II, CHITTOOR AT TIRUPATI

 

 

Present: Sri Achuta Partha Sarathy, President

           Sri Naga Sasidhara Reddy, Member

               

Tuesday, the Fifth (5^th) day of July, 2022

 

C.C.No.97 of 2019

 

(Delivered by Sri Achuta Partha Sarathy, President on behalf of the Bench)

 

Between:

 

K.Venkatamma,

W/o. late. K.Bhaskar Reddy,

Hindu, aged about 52 years,

D.No.19-14-174A, 6^th Cross,

Raghavendra Nagar,

Tirupati – 517 503.

                                                                                                …..Complainant.

 

And:

 

M/s. Shriram Life Insurance Co. Ltd.,

Rep. by its Branch Manager,

Tirupati I Branch,

R.C.Road,

Tirupati – 517 501. 

.….Opposite party.

 

                   This case coming on 04.04.2022 and 09.06.2022, for hearing in the presence of Sri.K.Narayana, counsel on behalf of the complainant, and Sri.S.M.Jhan, counsel on behalf of the opposite party, and upon hearing and considering the material on record, and the case having stood over for consideration till this day, this Commission delivered the following:-

 

O R D E R

1. The complainant filed this complaint under Sections-12 and 14 of C.P.Act 1986, praying for a direction to the opposite party, to honour the two insurance claims submitted by the complainant, and to pay an amount of Rs.2,21,000/- along with basic premium amounts of Rs.24,966/-, in view of the death of her husband K.Bhaskar Reddy, who expired on 12.08.2018, who is the insured as per the two policies bearing Nos. (i). NP011802071148 and (ii). NP011802071204, and further praying for litigation expenses of Rs.5,000/-.
2. It is the case of the complainant that she is a housewife. Her husband K.Bhaskar Reddy, had suddenly fallen sick during August 2018, and was admitted for treatment in Apollo hospitals, 21 Greams Lane, Off Greams Road, Chennai – 600 006. Unfortunately, her husband expired on 12.08.2018. Her husband obtained two insurance policies from the opposite party on 14.02.2018. The complainant is shown as the nominee. After completion of funerals, she submitted the claims under both the policies bearing Nos. NP011802071148 and NP011802071204.
3. Unfortunately, she was disheartened to hear that the opposite party repudiated the claim on 28.09.2018, though it was genuine claim. Upon the death of her husband, she approached Internal Claims Review Committee (ICRC) of the opposite party. ICRC also repudiated her claim on 08.04.2019 and upheld the decision by stating that there was suppression of existing disease by the policy holder at the time of taking policy.
4. It is averred that continuance of risk or otherwise would depend upon the terms and conditions of the policy. Apart from the initial premium payment, the opposite party also collected rider amount of Rs.607.75/- in addition to basic premium of Rs.23,205.25/-, while issuing the policy No.NP011802071204. The rider is a legal term, meant to denote an amendment, change or addition to a legal contract. Life insurance riders are features not found on a basic life insurance policy, and may provide benefits to the owner or beneficiaries of the life insurance contract and are collected by them, if they issue policy for covering entire ailments, if any found then and there.
5. Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability, which the policy purports to cover in the case of that person or those classes of persons, subject to an eventual life risk.
6. It is averred that rider protects an insured person, in case his health declines dramatically after policy is issued and there is a need for additional life insurance in the future. The rider is very important because additional life insurance is extra useful to those persons who have suffered a decline in health, since death is more likely to occur. Examples of this include suffering a heart attack or stroke, diabetes, gaining a significant amount of weight, or any other serious illness. The rider is often not too expensive and can be a very important addition to many policies. Hence, it is not open for the opposite party to repudiate the claim, as it has collected rider premium also.
7. The opposite party failed to discharge its responsibility of allowing the claim and was negligent in rendering purported service to the complainant. This resulted in deficiency in service towards the policy holder and his nominee being the complainant. Hence the complaint.
8. In the version of the opposite party it is admitted about the admission of the husband of the complainant K.Bhaskar Reddy in August 2018 in Apollo hospital, Chennai, and that he died on 12.08.2018. It is also admitted about the deceased life assured taking two policies on 14.02.2018. It is also admitted about submission of claims by the complainant on 28.08.2018 towards policy Nos. NP011802071148 and NP011802071204. It is also admitted that her claims were repudiated on 28.09.2018. The opposite party also admitted that the complainant approached Internal Claims Review Committee (ICRC), and that ICRC also repudiated the claim on 08.04.2019. It is averred that decision of the lower authority was upheld stating that the policy holder suppressed the existing disease at the time of taking policy. It is averred that the husband of the complainant K.Bhaskar Reddy, had proposed to take insurance policies by submitting proposal forms, which are Annexures-1 and 2. Based on the information provided, the opposite party has underwritten the proposals under the policy Nos. NP011802071148 and NP011802071204, under the plan “Shriram New Shri Life Plan”. The risk commenced from 14.02.2018 for an assured amount of Rs.2,21,000/-, for a term of 15 years along with Accident Rider (AR) with the premium of Rs.276.25/-, and family income benefit (FIB) with premium of Rs.331.51/- and a total premium for each of the policy being Rs.24,966/-. His spouse by name K.Venkatamma, was the nominee. The copy of the policy document containing schedule, first premium receipt, terms and conditions including AR and FIB for each of the policies are filed as Annexures- 4 and 3 respectively.
9. It is averred that life insurance policies are governed by the principles of “UBRRIMAFIDE” and the proposer is expected to correctly furnish the information regarding his health, habits, family history, personal medical history, income and age particulars etc. The insured has not furnished correct details. The insured is obliged to give full and correct information on all matters that would influence the judgment of a prudent insurer in determining whether to accept the risk, and to determine the rate of premium subject to which conditions etc., the premium will be fixed. The material facts are having a bearing on the risk in life insurance contracts. The state of health, illness present and past, occupation, habits, particulars of previous insurance etc., which are only within the knowledge of the proposer have to be stated. Basing on the information provided by the proposer in the proposal forms, the company of the opposite party has accepted the risk on the life of the deceased.
10.  The complainant intimated about the death of the life assured on 12.08.2018 due to heart failure. As the death claim arose within a period of six months from the date of commencement of the policies, the company investigated the claim to check the veracity. The copy of the letter dt:01.09.2018 is Annexure-5.
11.   It is averred that the investigation by the opposite party has disclosed that the deceased life assured (DLA) was admitted in Apollo hospitals, Chennai, on 18.07.2018 and was discharged on 04.08.2018 vide UHID No.AC01.0003786045 with patient identification No.CMHIP224422 under the main heading ‘History of Present Illness’ in ‘Chief Complaints’ it is stated that “This 57 year old gentleman a known case of Diabetes Mellitus, CAD-IWMI (2010)..” Further in the ‘history of Coronary Artery Disease, it is stated ‘Yes’, Duration: 8 years.
12.  It is averred that DLA was again admitted in the hospital within a short span of 4 days on 09.08.2018 and during the course of his treatment died on 12.08.2018. As per the Death Summary dt:20.08.2018 DLA died due to Refractory Ventricular Fabrilation, Ischemic Hepatitis, Ischemic Cardiomyopathy and Cardio Renal Syndrome. From the above medical records, it clearly establishes that the DLA was suffering from Diabetes Mellitus and CAD IWMI (Coronary Artery Disease Inferior Wall Myocardial Infraction) and was under treatment for the same since 2010, which was prior to submission of the proposals. The life assured K.Bhaskar Reddy was well aware of the facts of his ailments. He willfully, did not disclose the same in the proposal forms at the time of applying for insurance policies. He stated himself to be in good health and stated ‘No’ to the list of ailments mentioned in it. It is also pertinent to mention here that based on the declaration of health conditions and other facts mentioned in proposal form to be true, the said policies were issued in good faith. If the said K.Bhaskar Reddy, had disclosed the true facts regarding his health condition and other facts, it would have influenced the decision of the underwriters of the insurance company, in issuing policy to the life insured. The copy of the Discharge Summary and Death Summary are said to be Annexure-4A and 5. It has to be stated here itself that already the opposite party has shown letter dt:01.09.2018 as Annexure-5. The opposite party has extracted Section-45 of the Insurance Act 1938. It is averred that the DLA was guilty of suppression of material facts known to him.
13.  It is further averred that in the facts and circumstances and in view of the terms of the policy, the opposite party rightly repudiated the policy bearing Nos. NP011802071148 and NP011802071204, on the ground of furnishing false and incorrect information, and non-disclosure of material facts with fraudulent intention. The opposite party is not liable to pay any compensation. The copy of the repudiation letter is Annexure-6.
14.  The complainant was given an option of approaching the ICRC, if she was not satisfied with the decision of repudiation made on 28.09.2018. ICRC also confirmed the decision of repudiation. Not being satisfied, the complainant got issued legal notice on 01.05.2019. A reply dt:22.05.2019 was got issued by the opposite party. The letter by the ICRC dt:08.04.2019 and reply letter dt:22.05.2019 are Annexure-7 and 8.
15.  It is averred that Accident Rider or Family Income Benefit Rider are payable only in the case where the cause of death is due to accident. In the instance case, the death of the DLA was not due to accident. Therefore, the riders are not applicable. The policies were taken in collusion by the DLA with the complainant. It is averred that there is no cause of action and prayed to dismiss the complaint.
16.  Now the points that arise for consideration are:-

1. Whether repudiation of the claims by the opposite party is justified or not justified?  
2. Whether the complainant has succeeded in showing that there is deficiency of service?
3. Whether the complainant is entitled for claim amounts of Rs.2,21,000/- along with basic premium amount of Rs.24,966/- in each case under the policy Nos. NP011802071148 and NP011802071204, as claimed by the complainant? or any other relief? 

17. Point No.(i):- Whether repudiation of the claims by the opposite party is justified or not justified?
18.  The contention and evidence of PW-1 is that her husband has taken two insurance policies bearing Nos. NP011802071148 and NP011802071204 on 14.02.2018. He was hale and healthy. He suddenly became sick in August 2018 and was admitted in Apollo hospitals, Chennai. But, unfortunately he died on 12.08.2018. She submitted claims on 12.12.2018. Having promised to process the claims, the opposite party repudiated the claims on 28.09.2018. As indicated by the opposite party, she approached Internal Claims Review Committee (ICRC). The ICRC upheld the decision of repudiation by the letter / order dt:08.04.2019. The repudiation has no justification. Exs.A1 and A2 are the Non-Ulip Policy Schedules bearing  Nos. NP011802071204 and NP011802071148 along with first premium receipts in each case. Ex.A3 is the letter dt:28.09.2018 intimating about repudiation of both the claims. Ex.A4 is the letter from the Branch Manager of the opposite party to the Claims Support of Shriram Life Insurance Company Ltd., Secunderabad, dt:12.12.2018, requesting to process the claims at the earliest. Ex.A5 is the legal notice got issued on behalf of the complainant to the opposite party dt:01.05.2019 stating that repudiation is unjust and the same was made despite when there was a rider. Ex.A6 is the reply letter dt:22.05.2019 got issued by the General Manager, Shriram Life Insurance Company Ltd, to the legal notice dt:01.05.2019.
19.  The contention of the opposite party is that the deceased life assured (DLA) was suffering from pre-existing health ailments of CAD IWMI i.e. Coronary Artery Disease Inferior Wall Myocardial Infraction. In the proposal forms for both the policies, he made material suppression and concealed the pre-existing ailments. For the question No.14, he has negatived about suffering with ailments relating to heart, stomach, lungs, liver, kidney, digestive, reproductive, brain, nervous system. He also suppressed about suffering with Diabetes and BP. He has given false answers in the policy statement, otherwise the opposite party would not have accepted to take the risk. Since death occurred within six months, they made investigation and came to know about these false answers and about suppressing material facts with regard to health issues. They validly repudiated the claims and the same was also upheld by ICRC. It is also their evidence that DLA has been suffering from these ailments and the repudiation is valid and in accordance with Section-45 of the Insurance Act 1938. On behalf of the opposite party Exs.B1 and B2 are the proposal forms for the respective policies both dt:31.01.2018. Exs.B3 and B4 are the Non Ulip Policy Schedules bearing Nos.NP011802071204 and NP011802071148 along with forwarding letter.
20.  The contention of the complainant is that these policies were accompanied by riders for which additional amount was deducted and not withstanding anything and notwithstanding the existence of any ailments, these policies have to be honoured. On the other hand, it is the stand of the opposite party that the riders provided are accident benefit rider and there is also family income benefit rider. In Exs.B3 and B4 it is shown that there is endorsement for accident benefit riders. It shows that if at any time when the policy is inforce, but before the end of rider term, the life assured is involved in an accident resulting in either permanent disability or death and that the same is proved to the satisfaction of the company, the company agrees to pay an amount equal to sum assured. The accident benefit rider is not unguided rider, and it does not show that notwithstanding anything and despite presence of critical ailments such as cardiac, respiratory, liver malfunction etc., the claim has to be honoured. The family income benefit is an undertaking by the insurer that would pay monthly income benefit of one percent of the sum assured to the nominee or dependent of the DLA. Both the policies are having accident benefit riders. Exs.B5 and B6 are the attested copies of Discharge Summary and Death Summary of the insured. Ex.B7 is the letter of repudiation, which is the replica of Ex.A5.  Ex.B8 is the copy of the decision of the ICRC upholding the decision of repudiation dt:28.09.2018 and intimating the same to the complainant. Ex.B9 is the copy of reply notice i.e. copy of Ex.A6. Exs.B1 and B2 also contains the extracts of Sections-41 and 45 of the Insurance Act i.e. with regard to not making inducements to the employees of the insurer etc. and with regard to not questioning the policy after expiry of 3 years, and repudiation of policy, if the same was deducted earlier in the event of suppression of material facts.
21.  It would be useful to extract Sectoin-45 of the Insurance Act 1938, which reads as follows:-  

​“Policy not to be called in question on ground of mis-statement after two years.—No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after coming into force of this Act shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement 1[was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made] by the policy-holder and that the policy‑holder knew at the time of making it that the statement was false 2[or that it suppressed facts which it was material to disclose]: 2[Provided that 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.]

The secondpart of Section-45 entitles thecompany torepudiatethecontract even after the expiry of two years, ifthree conditionswere fulfilled viz. (a) the statement was on a material matter or therewassuppression offactswhichitwas material todisclose;(b)thesuppressionwas fraudulently madeby thepolicy-holder, and (c)the policy-holdermust haveknown at the time of the makingof thestatement that it was false or that it suppressed facts which it was material to disclose”.

22.               Exs.B3 and B4 also contains Section-38, which is with regard to assignment and transfer of insurance policy and Section-39 with regard to nomination by the policy holder.

23.               Exs.B1 and B2 shows that the DLA has given answers and also gave a declaration. For the question 14K, he has answered as ‘No’, for the two alternatives of writing ‘Yes’ or ‘No’ with regard to K1 to K8. Apart from other ailments, it is shown that there is question with regard to ailments relating to heart. It is shown that DLA answered it as ‘No’. It is also shown that for question K4, he indicated ‘No’ for presence or absence of Diabetes, BP etc. Ex.B5 shows that the DLA was admitted on 18.07.2018 and was discharged on 04.08.2018 in Apollo Hospitals, Chennai. In the diagnosis it is shown that the DLA is suffering with Type 2 Diabetes Mellitus and Acute coronary syndrome – IWMI, Severe LV dysfunction and Type-1 Cardio Renal Syndrome. It is also shown in the history of CAD that the insured was suffering with Coronary Artery Disease since 8 years and it is also mentioned that chief complaint is Diabetes Mellitus and Acute Coronary Syndrome – IWMI, Severe LV dysfunction and Type 1 Cardio renal syndrome. It is also shown in the history of CAD that the insured was suffering with Coronary Artery Disease since 8 years, and it is also mentioned that chief complaint is Diabetes Mellitus, CAD – IWMI since 2010, for which details are not available.

24.               Ex.B6 Death Summary also shows that the deceased life assured is a known case of coronary artery disease with severe LV dysfunction. Exs.B5 and B6 are also bearing the signatures of the complainant. Ex.B7 repudiation of claims, in which  it is mentioned that the DLA suppressed about pre-existing medical ailments and has given false answers with regard to ailments relating to heart, stomach, lungs, liver etc. and about the presence or absence of diabetes. A policy of life insurance cannot be questioned after two years by an insurer on the ground that the life assured has given false or inaccurate answers. However, the insurer may show that the false statement is with regard to material matter or there was suppression of facts which was material to disclose and it was fraudulently made and that the policy holder knows at the time of making the said statement that it was false.

25.               It cannot be believed that the DLA was hale and healthy at the time of obtaining policy and he did not suffer with any ailments and he did not suppress about any pre-existing ailments. It is contended by the learned counsel for the opposite party and shown by the opposite party that the DLA was suffering with Type II Diabetes Mellitus and CAD IWMI (Coronary Artery Disease Inferior Wall Myocardial Infraction). His death summary shows he died due to Refractory Ventricular Fabrilation, Ischemic Hepatitis, Ischemic Cardiomyopathy and Cardio Renal Syndrome, and it is also shown that he was suffering with CAD-IWMI since 2010. It is shown that there is material suppression with regard to presence of these ailments. It cannot be believed that the DLA was not aware about these ailments. The same has to be considered as fraudulent suppression of material facts. The contention of the complainant that both the policies are accompanied by riders, which require that the policies have to be honoured even if the diseased life assured is having serious ailments. The same cannot be accepted. The rider provided is accident benefit rider and family income benefit rider. The repudiation made by the opposite party is also examined by the Internal Claims Review Committee. The life insurance policies are covered by the principle of UBRRIMAFIDE. Good faith is required by both sides in such contracts. If there are any false answers, it would be known to the insured, who come forward to take policies. It will be within the special knowledge. As it will be within his special knowledge, he is expected to come with clean slate and make disclosures. It is shown that the DLA has suppressed material information about suffering with CAD – IWMI and LV dysfunction, since long time prior to taking these policies. He submitted proposals on 31.01.2018 and he has taken policies on 14.02.2018. He died within six months on 12.08.2018. Making investigation about the cause of the death etc. was made as expected from a prudent insurer. Nothing can be faulted by the same. It is shown that the opposite party has validly repudiated both the claims and that the policy Nos.NP011802071204 and NP011802071148 obtained under policy schedules corresponding to Exs.A1 and A2. The repudiation has every justification. The same cannot be found fault. Point No.1 is answered accordingly.

26.               Point No.(ii):-  Whether the complainant has succeeded in showing that there is deficiency of service?

27.               Point No.1 is answered that the opposite party has validly repudiated the claims under both the policies and there is every justification for making repudiation. The repudiation was also re-examined by the ICRC. Under the said circumstances, we cannot state that there is any deficiency of service. Point No.2, is answered that there is no deficiency of service on the part of the opposite parties. Point No.2 is answered accordingly.

28.               Point No.(iii):-  Whether the complainant is entitled for claim amounts of Rs.2,21,000/- along with basic premium amount of Rs.24,966/- in each case under the policy Nos. NP011802071148 and NP011802071204, as claimed by the complainant? or any other relief? 

29.               The complainant is praying for direction to the opposite party to pay the sum assured of Rs.2,21,000/- in each case. Apart from that also claiming basic premium amount of Rs.24,966/- in each case, under the policy Nos. NP011802071148 and NP011802071204. As point Nos.1 and 2 answered against the complainant, the complainant is not entitled for any relief, as prayed for. Point No.3 is answered accordingly.

30.               In the result, the contentions made by the complainant failed. It is shown that the complainant is not entitled for any relief. Complaint is liable to be dismissed. Hence, complaint is dismissed. In the circumstances of the case, each party shall bear it’s costs, though normal norm is that cost follows event.       

This order is passed unanimously by the President and Member. The delay in the disposal of the C.C. occurred due to vacancy in the post of the President and Members of the District Commission and as there was no quorum.      

                   Dictated to the stenographer, transcribed and typed by him, corrected and pronounced by us in the Open Commission this the 5^th day of July, 2022.    

 

           

                Sd/-                                                                                   Sd/-           

(Sri. N.Sasidhara Reddy)                                                  (Sri. Achuta Parthasarathy)

           Member                                                                              President

 

 

APPENDIX OF EVIDENCE

 

witnesses examined on behalf of complainant

 

PW-1: Smt. K. Venkatamma, W/o. Late K. Bhaskar Reddy (Chief affidavit filed).

 

witnesses examined on behalf of opposite party

 

RW-1: Sri E. Sridhar, S/o.Late E.J. Lingama  (Chief affidavit filed).

 

 

EXHIBITS MARKED ON BEHALF OF THE COMPLAINANT

 

Exhibits (Ex.A)	Description of Documents
	Photo copy of Shriram Life Insurance NON-ULIP POLICY SCHEDULE bearing No. NP011802071204. Dt.14.02.2018.
	Photo copy of Shriram Life Insurance NON-ULIP POLICY SCHEDULE bearing No. NP011802071148. Dt.14.02.2018.
	Photo copy of Letter received from Claims Department. Dt.28.09.2018.
	Photo copy of Letter addressed to the Claims Support, Sriram Life Insurance Company Limited, Secunderabad. Dt.12.12.2018.
	Office copy of Legal Notice to Opposite Party by the Complainant along with Ack Due. Dt.01.05.2019.
	Reply to our Legal Notice Dt. 01.05.2019 from Opposite Party. Dt. 22.05.2019.

 

EXHIBITS MARKED ON BEHALF OF THE OPPOSITE PARTY

 

Exhibits (Ex.B)	Description of Documents
	Attested true copy of Sriram Life Insurance Company Limited Proposal Form vide No. NP011802071204. Dt.31.01.2018.
	Attested true copy of Sriram Life Insurance Company Limited Proposal Form vide No. NP011802071148. Dt.31.01.2018.
	Attested true copy of the Policy Document containing NON-ULIP Policy schedule 1st Premium Receipt, Terms and Conditions including AR & FIB.
	Attested true copy of the Policy Document containing NON-ULIP Policy schedule 2nd Premium Receipt, Terms and Conditions including AR & FIB.
	Attested true copy of Apollo Hospitals Discharge Summary for the period from 18.07.2018 to 04.08.2018.
	Attested true copy of Apollo Hospitals Death Summary for the period from 09.08.2018 to 12.08.2018. Expired Date: 12.08.2018.
	Attested true copy of Repudiation of Death Claim. Dt. 28.09.2018.
	Attested true copy of the Internal Claims Review Committee (ICRC) Letter, Dt. 08.04.2019.
	Attested true copy of the Reply Notice Dt. 22.05.2019 issued by our Company Legal Notice Dt.01.05.2019.

 

                                                                                                                   Sd/-

                                                                                                                President

 

 

Copies to:  1) The Complainant 

                 2) The Opposite party

 

 

* S.Salam