Coming down heavily on Bajaj Allianz Life Insurance Co Ltd for failing to conduct necessary tests and investigations before issuing a policy for a substantial amount and then repudiating the claim on the grounds of pre-existing diseases, the national consumer disputes redressal commission (NCDRC) asked the insurer to pay a Rs1 crore insurance claim with an interest of 12%pa (per annum) to the family of the insured.
In an order last week, the bench of Subhash Chandra (presiding member) of NCDRC says, "The opposite party (Bajaj Allianz Life) has mainly emphasised upon the lack of full disclosure of material facts at the time of the policy being taken. On this issue, it is notable that it was also open for Bajaj Allianz Life to have conducted necessary tests and investigations since the risk cover was a substantial amount. Admittedly, it did not do so. Therefore, seeking protection under Regulation 2(1)(d) of the insurance regulatory and development authority of India (IRDAI)'s protection of policyholder's interest regulations or Section 45 of the insurance act at this stage is of no avail to them."
The bench noted hypertension, obesity, and diabetes are lifestyle diseases that can occur at any stage and need not be life-threatening. "Bajaj Allianz Life has not proven by evidence that the test parameters of the deceased life assured (DLA) were abnormally high as to trigger a life-threatening cardiac event. In any case, the DLA was due to cardiac arrest, which was a covered risk. There are many cases of death by cardiac arrest in middle-aged persons, which, in the present case, is sought to be ascribed to pre-existing (lifestyle) diseases. In the absence of any cogent proof based on documentary evidence supported by an affidavit, it is not possible to accept the conclusion of Bajaj Allianz Life in the instant case that the DLA had pre-existing illnesses which were wilfully concealed at the time of obtaining the policy. In this view of the matter, the argument that the principle of utmost good faith was violated rendering the policy void, ab initio does not sustain. For these reasons, the complaint is liable to succeed," it says.
On 22 June 2012, Vijayawada-based Dr P Phanindranandha Reddy bought a group credit protection plus insurance policy for Rs1 crore from Bajaj Allianz Life by paying Rs6.96 lakh premium. However, on 10 November 2013, Dr Reddy died a sudden but natural death. His wife, Pachipala Namratha, filed an insurance claim in December 2013. However, the claim was rejected by Bajaj Allianz Life, claiming that Dr Phanindranandha Reddy did not disclose pre-existing diseases like type-2 diabetes mellitus, hypertension, and obesity in the proposal form. Ms Namratha's representation before the claims review committee was also disallowed on 17 June 2014.
She then filed a complaint before NCDRC seeking the entire claim amount along with interest at 15%, Rs2 lakh towards compensation for mental harassment and agony, and Rs2 lakh as litigation costs.
During the hearing, the counsel for Bajaj Allianz Life contended that, being a doctor, the DLA was aware of his pre-existing illnesses and deliberately withheld its declaration in the proposal or enrolment form while obtaining the insurance policy. "As an insurance policy is a contract of uberrima fides or utmost good faith, suppression of material information rendered the policy void ab-initio and was accordingly repudiated...the non-disclosure misled the insurer, who did not undertake detailed investigations before considering the issuance of the policy...As the DLA died due to cardiac arrest, contributing illnesses for which are abnormally high blood sugar levels and hypertension leading to ischemic heart disease, the suppression of these facts was significant and therefore, the rejection of the claim was justified."
In support of its arguments, Bajaj Allianz Life submitted reports from three doctors, including Dr G Sunil Chowdary, who issued the death certificate of Dr Phanindranandha Reddy. Dr GVR Murthi provided prescriptions for Dr Phanindranandha Reddy for hypertension and diabetes and vide letter dated 17 December 2013 confirmed treating him since 2011. On 18 March 2014, Dr P Damodar Reddy certified that Dr Phanindranandha Reddy was overweight and diabetic for the past three years.
However, the counsel for the complainant, Ms Namratha, submitted that her husband was not suffering from any of the diseases as alleged. She also denied the statements of the doctors produced as being fabricated as they were not treating Dr Phanindranandha Reddy, her husband.
She contended that Dr Chowdary was not their family doctor, and he and Dr Damodar Reddy are not general physicians, cardiologists, or endocrinologists but anaesthesiologists who have not even treated her husband on any occasion. "Their reports obtained by the Bajaj Allianz Life's investigator are alleged to be fabricated and false."
"Dr Phanindranandha Reddy, the DLA, was himself a doctor who, if he was suffering from hypertension and/or diabetes, would not have subjected himself to be treated by an anaesthesiologist instead of a heart specialist, general physician or endocrinologist," she submitted.
Bajaj Allianz Life contended that although there was no medical examination conducted of Dr Phanindranandha Reddy prior to the policy being approved, the non-disclosure of any health condition adversely prejudices the decision of the insurance company relating to acceptance of risk. Citing the report of its investigator, the insurer also claimed that Dr Phanindranandha Reddy died in Hyderabad and not in Vijayawada, where his cremation took place.
After hearing both sides, Mr Chandra from NCDRC observed that the crux of the issue is whether the policy was obtained based on the suppression of material facts. "Admittedly, Bajaj Allianz Life did not insist on detailed medical tests and examination of Dr Phanindranandha Reddy. Its claim that there was wilful suppression of material facts is based upon investigations by the investigator appointed by Bajaj Allianz Life. The investigations reveal that Dr Phanindranandha Reddy, who was himself a doctor, was under treatment for hypertension, diabetes, and dyslipidaemia by two doctors who were anaesthesiologists. The prescriptions and letters issued by them are disputed by the complainant (Ms Namratha) as being fabricated and false."
The bench noted, "The investigator has listed in his report a large list of persons he interacted with during his investigations. However, there is no affidavit filed as part of the evidence by Bajaj Allianz Life in support of the statements and/or inferences drawn by the investigator. No document or basis has been produced to support the conclusion that Dr Phanindranandha Reddy expired in Hyderabad and not Vijayawada or when and how the body was brought to Vijayawada, where the cremation took place the same day. The reason for suspecting the death in Hyderabad, which is stated to be a 'mystery' is not supported by any documentary evidence too."
"The complainant (Ms Namratha) has contended that there was no interview conducted with her by the said investigator in the course of his investigations, and therefore, there was no opportunity to provide her version or to clarify any issues. The report of the investigator is, therefore, a document which is called into question by Ms Namratha on several grounds which have not been answered by Bajaj Allianz Life which has relied upon it to conclude that there was a breach of uberrima fides rendering the policy itself as a contract void, ab initio. The veracity of the surveyor's report is therefore suspect along with its conclusions," NCDRC stated.
It says the complaint is found to have merit and is accordingly partly allowed. NCDRC then directed Bajaj Allianz Life to pay Ms Namratha the insured sum of Rs1 crore along with interest at 12%pa from the date of submission of the claim within eight weeks, failing which it would be paid with interest at 15%pa till realisation.
(Consumer Case No594 of 2015 Date: 18 April 2023)