NCDRC Orders Bajaj Allianz Life Insurance to Compensate Policyholder's Nominee
New Delhi, April 18, 2023
In a recent ruling by the National Consumer Disputes Redressal Commission (NCDRC), Bajaj Allianz Life Insurance Company Limited has been ordered to compensate the nominee of a policyholder for a Group Credit Protection Plus Insurance policy. The case, Consumer Case No. 594 of 2015, involves a complaint filed by Ms. Pachipala Namratha, the widow of the late Dr. P. Phanindranandha Reddy, residing in Vijayawada, Andhra Pradesh.
Background of the Case
The complaint was filed under Section 21(a)(i) of the Consumer Protection Act, 1986, alleging deficiency in service by Bajaj Allianz Life Insurance Company. Ms. Namratha, as her husband's nominee, had filed a claim under a Group Credit Protection Plus Insurance policy issued by the insurance company.
The policy, dated June 22, 2012, provided a life cover of Rs 1,00,00,000/- against a premium of Rs 6,96,519.64. Tragically, Dr. Phanindranandha Reddy passed away suddenly due to natural causes on November 10, 2013. Ms. Namratha approached the insurance company in December 2013 to settle the claim. However, in a letter dated April 14, 2014, the insurance company repudiated the claim, citing the non-disclosure of pre-existing diseases such as Type 2 Diabetes Mellitus, Hypertension, and Obesity in the policy proposal form dated June 19, 2012. Despite Ms. Namratha's representation before the Claims Review Committee, the claim was disallowed on June 17, 2014.
The Complainant's Prayers
Ms. Namratha sought several reliefs from the NCDRC, including:
1. Directing the respondent (Bajaj Allianz Life Insurance Company) to pay the entire insured sum of one crore rupees to her, along with 15% interest from the date of the initial claim.
2. Compensation of twenty lakh rupees for mental harassment and agony.
3. Two lakhs rupees towards litigation costs.
4. Any other order deemed fit and proper by the NCDRC.
The Insurance Company's Defense
Bajaj Allianz Life Insurance Company defended the complaint by stating that Dr. Phanindranandha Reddy, as a doctor, was aware of his pre-existing illnesses and deliberately withheld their declaration in the policy proposal/enrollment form. They argued that an insurance policy is a contract of utmost good faith, and the suppression of material information rendered the policy void ab initio, justifying its repudiation. They also emphasized that the DLA had a medical history of diabetes, hypertension, and other diseases, as per statements and prescriptions of doctors collected during their investigation.
NCDRC's Observations and Verdict
After hearing both sides and carefully considering the evidence, the NCDRC observed that the central issue was whether the policy was obtained based on the suppression of material facts. The insurance company did not insist on detailed medical tests and examinations before issuing the policy, and seeking protection under regulations related to policyholder interest or the Insurance Act was not applicable at this stage.
The NCDRC found that the insurance company failed to provide sufficient evidence to prove that Dr. Phanindranandha Reddy had pre-existing illnesses that were willfully concealed. It was noted that the DLA had passed away due to a cardiac arrest, a covered risk, and the company's argument that pre-existing diseases led to his death was not substantiated.
As a result, the NCDRC ruled in favor of Ms. Namratha and directed Bajaj Allianz Life Insurance Company to pay the insured sum of Rs 1,00,00,000/- along with 12% interest per annum from the date of claim submission within 8 weeks. If not paid within this timeframe, the interest rate would increase to 15% per annum until the payment is made.
This ruling highlights the importance of thorough investigation and substantiated evidence in insurance claim disputes, emphasizing that policyholders should not be unfairly penalized for alleged non-disclosures.
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Disclaimer: This article is based on the NCDRC judgment and is for informational purposes only. It does not constitute legal advice.
Case Number: Consumer Case No. 594 of 2015
Date of Order: April 18, 2023
Complainant: Pachipala Namratha
Opposite Party (Insurance Company): Bajaj Allianz Life Insurance Company Limited
Presiding Member: Hon'ble Mr. Subhash Chandra
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