It is common practice for insurance agents to obtain a customer’s signatures on a blank proposal form, with the assurance that all formalities will be attended to. Agents often fill up wrong information which leads to a policy being issued, but problems occurring when a claim is lodged.
The National Commission has recently brushed aside the insurance companies excuses and has ordered them to settle the claims.
Sanjay Bare had taken high- value life insurance policies from four different companies. SBI Life Insurance, IDBI Fortis, Kotak Mahindra and Metlife. The sum insured was Rs 1 Crore, Rs 3.5 Crore, Rs1.5 Crore and Rs. 1 crore respectively.
Sanjay was not well versed in English. He had merely signed the proposal form as advised by the insurance agent, who had then taken care of the rest of formalities.
Unfortunately, within a short time taking the policies, Sanjay met with an accident and expired on January 2, 2010. All the insurance companies refuse to settle the claims, alleging these were international non-disclosure of relevant facts and suppression of material information.
Sanjay’s widow Meena, and his firm Yash Construction and Land Development, which were to get the benefits under the policy, filed four separate complaints before the National Commission against each of insurance companies.
Even though the claims were huge, the insurance companies were remiss and did not file their reply in time. They proceeded ex parte.
The firms raised similar defences, stating Sanjay has failed to disclose he had taken multiple policies from other life insurance companies. There were also discrepancies in Sanjay educational qualifications they contented.
Sukumar Pattjoshi, senior advocate, along with Uday Wavikar, argued that the qualification of the insured would not have any bearing on the underwriting of the risk, and a person can take as many policies as he wants. It was also argued that the insured cannot be held liable for the information filled in by the insurance company’s agent. Once the premium is submitted, the claim would have to be settled.
According to in its order of January 15, delivered by Justice J M Malik for the bench along with DR. S M Kantikar, the National Commision allowed all the consumer complaints, and directed the insurance company to settle the claims by paying the sum insured along with a national interest of 4%p.a. from the date of the consumer complaint till payment. Time of 90 days was given for compliance, and if delayed, the interest rate would stand enhanced to 6% p.a. In addition, litigation costs of Rs.10,000 were awarded in each of the four complaints.
Conclusion: An insured cannot be penalized for wrong information filled by the agent in the proposal form. A person is free to take as many policies as he wishes so long as he can pay the premium.
If you also become a victim of consumer fraud or online fraud consumer case then don’t hesitate to file consumer complaints online at Voxya online consumer complaints forum to get a quick redressal of consumer complaints.