Coming down heavily for unethical practices and luxury of litigation in accidental death claim matters, the national consumer disputes redressal commission (NCDRC) directed Bajaj Allianz Life Insurance Company Ltd to pay the accidental death insurance claim of Rs20 lakh, a compensation of Rs5 lakh and Rs50,000 as litigation costs to the nominee of the deceased life assured (DLA).
In a strongly-worded order last week
, the NCDRC bench of Subhash Chandra (presiding member) and air vice-marshal (AVM) J Rajendra (retd) (member) says, "The appellants (Bajaj Allianz Life Insurance) have not provided any substantial and legally sustainable evidence as to the deficiencies or misrepresentations based on which the claim has been repudiated in the first place, based on the innocent answers given based on their own limited understanding. Ultimately, due to such unethical practices by the wealthy insurance companies who can easily afford these 'luxury litigations', the poor surviving dependents, who are in dire need of that money, are deprived of the proceeds of the claim when it mattered (to) them the most."
"The death in this case occurred in 2010. Had this money been provided to the needy family, instead of repudiating them on mischievous grounds and then making them run from pillar to post, their lives could have been better. That was the original intention of the deceased policyholder. To set a deterrent to the appellant for adopting such dubious practices in settlement of claims and also to compensate for the harassment meted out to the respondent, we deem it fit to award Rs5 lakh as compensation," the order says.
In March 2010, Jaipur-based Narsi Lal Gupta obtained a 15-year life insurance policy with a sum assured of Rs10 lakh and an additional accident death benefit of Rs10 lakh from Bajaj Allianz Life Insurance.
However, on 11 July 2010, Mr Gupta met with an accident and subsequently died on 26 July 2010 while undergoing treatment at SMS Hospital in Jaipur. Geeta Devi, wife and nominee of Mr Gupta, informed the insurance company about his death and filed a claim.
On 27 August 2010, Bajaj Allianz Life Insurance issued a receipt after receiving all documents in a letter dated 6 October 2010. However, despite completing all necessary procedures, the insurance company failed to disburse the policy benefit to Ms Gupta. Distressed by the delay and failure of the insurer, she forwarded a legal notice on 31 March 2011, explaining the case and grievances and demanding Rs33.21 lakh from the insurance company. However, no response was received. On 1 March 2011, Bajaj Allianz Life Insurance repudiated the insurance claim.
Being aggrieved due to the repudiation of the claim and deficiency in service from the insurer, Ms Gupta filed a consumer complaint before the Rajasthan state consumer disputes redressal commission seeking Rs33.21 lakh with an interest of 18%pa (per annum) from Bajaj Allianz Life Insurance.
During the hearing before the state commission, the insurer submitted that Mr Gupta's income did not meet the sum-assured limit as per the insurance policy conditions, and the investigating report raised questions about the accident's authenticity. Consequently, it declined to pay the claim and requested the dismissal of the complaint.
While allowing the complaint, the state commission directed Bajaj Allianz Life Insurance to pay the Rs10 lakh insurance claim and Rs10 lakh accidental death claim benefit with an interest of 9%pa, Rs1 lakh towards mental harassment and Rs25,000 for cost of litigation.
Aggrieved by the state commission's order, Bajaj Allianz Life Insurance approached NCDRC, seeking to quash the order. It contended that the state commission failed to recognise the ulterior and speculative motive of Mr Gupta, who obtained a substantial policy of Rs10 lakh with an accident benefit of Rs10 lakh by providing false or exaggerated income information. "Within just four months and five days of acquiring the policy, he suffered a fatal head injury and passed away, allegedly due to an accident. Although he was employed as a khalasi (cleaner), he declared himself as self-employed, involved in selling spices and namkeen in the proposal form and acquired the policy through fraudulent and illegal means, deceiving the insurer. Therefore, the impugned order should be set aside."
Ms Gupta, the wife of Mr Gupta, reiterated the facts of the case and contended that the grounds taken by the insurer are not justifiable and maintainable. "All the grounds advanced relate to overstatement of income of Mr Gupta, his profession, and circumstantial facts of death, which are irrelevant and being raised to delay the process of law."
"Further, Bajaj Allianz Life Insurance had caused an investigation into the claim through an agency whose report failed to prove that Mr Gupta had committed suicide. The police investigation report and post-mortem clearly proved that his death was due to head injuries caused by the accident. There is nothing new in this appeal that had not been previously brought before and considered by the state commission. Therefore, the appeal should be rejected," she argued.
The counsel for Ms Gupta contended that, by denying a genuine claim, the insurer displayed a deficiency in service. "The proposal form was in English, which the insured did not understand well. This raises questions about whether the terms of the policy were properly explained to him. As per the declaration in point no24 of the proposal form, the insurance cover was to commence after the consideration of the application and the realisation of the required premium. Therefore, once the insurance policy was issued, Section 45 of the Insurance Act, which deals with repudiation of claims, should not be applicable to deny the nominee's claim after the death of the life assured."
"Bajaj Allianz Life Insurance failed to provide reasonable evidence to support their position, whereas the respondent or complainant (Ms Gupta) had consistently maintained that the deceased had not concealed any relevant facts about his income or occupation," he submitted.
After examining the pleadings and associated documents available on record and thoughtfully hearing the arguments advanced by counsels for both parties, the NCDRC bench observed that the primary issue and objections raised by Bajaj Allianz Life Insurance are that Mr Gupta deliberately concealed vital information while obtaining the insurance policy, including overstating his income and misrepresenting his occupation.
The bench noted that Bajaj Allianz Life Insurance mainly relied upon specific investigations, and intriguingly, as part of the investigation, statements of the widow and brother of Mr Gupta were recorded and made the basis for the repudiation of Ms Gupta's claim.
In any case, NCDRC says there were no eyewitnesses to the accident on 11 July 2010. "The variation in the statements of the widow and the brother of the deceased, who were nowhere near the accident site, has, however, been made the basis for the repudiation of the claim, terming it as fabrication of circumstantial information relating to the death of life assured."
"In any case further, the insurance obtained by Mr Gupta was on his life. It has neither been established nor even averred by the insurer that the cause of the death falls under any exclusion clause of the insurance contract. Without a doubt, the insured died, and the death was due to certain serious injuries suffered by him in an accident. This having been substantially established and admitted by both the parties, the deliberation pertaining to the purpose of presence at the site was on account of the work he was doing or personal commitment or otherwise are of very limited consequence. Therefore, the so-called circumstances and fabrication of the circumstances relating to the death of the insured are entirely untenable and baseless," the bench says.
In addition, NCDRC noted that Mr Gupta was truthful about the details he stated, and there is no reason to disbelieve his income. "In any case, nothing contrary has been brought on record independently to establish that what the deceased insured and stated was false. Thus, there is neither an overstatement of income nor any misrepresentation of his occupation. When once his policy is valid and he is truthful of the facts, and he has stated, the benefit thereof cannot be denied."
Mr Chandra and AVM (retd) Mr Rajendra also expressed deep concern about how the insurance claim was rejected. The bench says, "Based on the overall facts and circumstances of the case, we are deeply concerned to notice the casual and mischievous manner in which the claim is repudiated, leaving no scope for the poor survivors of the family but to run around judicial fora by spending their precious money. Further, the case is prolonged by filing appeals on frivolous and mischievous grounds in a mechanical manner."
"First and foremost in the chain are the grounds or reasons mentioned in the repudiation letter, which are very vague and cryptic and do not in any manner explain to the poor dependent survivors the actual reasons based on which the claim was repudiated. They could not even fathom why the claim was rejected. The practice of conducting unscrupulous enquiries with no factual, reliable basis and then repudiating the claim with vague reasons and then initiating and protracted, frivolous and vexatious litigations based on such unscrupulous inquiries with unethical intentions to repudiate the claims is highly deplorable," it added.
Expressing deep concerns, the bench says, "While the validity of the life insurance contract and death of the insured in an accident were admitted facts, the staff of Bajaj Allianz Life Insurance did everything possible to split hairs into the proposal form for life insurance after Mr Gupta's death, obtained the statements of his widow and brother without informing them of the scope and purpose of taking their statements, created non-existing contradictions out of versions of such uneducated and uninformed persons and repudiated the claim of destitute family for over 13 years. The claimant needs to be specifically compensated for such gross misdemeanour."
NCDRC then directed Bajaj Allianz Life Insurance to pay, within one month, Rs20 lakh with an interest of 9%pa from 1 March 2011, when the claim was rejected, Rs5 lakh as compensation for harassment caused to the widow and family of the insured, who are poor and uneducated by denying them their rightful claim, and Rs50,000 as litigation cost.
(First Appeal No1820 of 2019 Date: 25 October 2023)