Tata AIA Life Insurance Asked To Pay Entire Death Claim and Rs1 Lakh as Litigation Cost

Moneylife Digital Team 03 October 2024

Consumer Interest

Holding Tata AIA Life Insurance Co Ltd (earlier known as Tata AIG Life Insurance Co Ltd) responsible for not notifying the complainant of acceptance or rejection of an insurance proposal within the required 15-day period, which constitutes a breach of regulatory obligation, the national consumer disputes redressal commission (NCDRC) asked the insurer to pay the balance Rs1.80 lakh and Rs1 lakh litigation cost to the nominee of the deceased life assured (DLA). Tata AIA Life Insurance contended that it did not issue the insurance policy or communicate its decision on the proposal to the DLA.

In an order last week, the NCDRC bench of Binoy Kumar (presiding member) says, "The rejection of the claim after the assured's death, based on the non-issuance of the policy, appears to be an attempt to evade liability. The insurance company definitely committed a deficiency of service under the Act by rejecting the claim of the complainant. The state commission in its order, has dealt with the subject in detail and suffers from no illegality, material irregularity or jurisdictional error."

Upholding the order passed by the Rajasthan state consumer disputes redressal commission, NCDRC increased the cost of litigation to Rs1 lakh from Rs10,000 and asked Tata AIA Life to pay the balance of Rs1.80 lakh insurance amount to Gindo Devi, the wife and nominee of Suraj Bhan.

On 24 November 2008, Mr Bhan from Jhunjhunu district duly filled out the application form and paid Rs20,000 as a premium for invest assure flexi insurance policy to Tata AIA Life. A medical examination of Mr Bhan was also conducted on 7 January 2009. In his health status, he had declared as suffering from paralysis.

However, on 23 January 2009, he passed away. After his death on 31 January 2009, Tata AIA Life sent a modified policy with an increased premium.

The counsel for Ms Devi argued that under rule 4 (6) of the Insurance Regulatory and Development Authority (Protection of Policy Holders' Interest) Regulations, 2002, Mr Bhan should have been informed about the acceptance or cancellation of the proposal, which did not happen. "The insurance company only claimed that the proposal was not accepted and no policy was issued and it returned the premium amount of Rs20,000 after Mr Bhan's death."

NCDRC observed that Mr Bhan had declared his health status as suffering from paralysis. "So there is no issue of non-disclosure. The premium was collected accordingly (by the insurance company). No new health status has been argued, which warranted the delay in either accepting or rejecting the proposal form or delaying acceptance with a modified premium amount."

"The argument being raised by Tata AIA Life is that it had not issued the policy. But, the insurance company failed to issue the policy or communicate any decision regarding the proposal submitted on 24 November 2008, in violation of Rule 4 (6) of the Insurance Regulatory and Development Authority (Protection of Policy Holders' Interest) Regulations, 2002," the bench said.

While directing Tata AIA Life to pay Ms Devi Rs1.80 lakh, the balance insurance amount, NCDRC increased the cost of litigation to Rs1 lakh from Rs10,000.

(Revision Petition No2719 of 2017 Date: 27 September 2024)

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