Order Name: Life Insurance Corporation Of India Vs. Pittala Pochamma
Case No.: R. P. No. 1058/2017
The National Consumer Disputes Redressal Commission, led by Justice Sudip Ahluwalia, recently made a decision that implicates both the Life India Corporation and the employer of an insured individual. They were found deficient in service as they denied an insurance claim on grounds that the employer did not pay the premium.
The story begins with a woman who was the nominee of her late husband’s insurance policies. Her husband was an employee of Singareni Collieries Company Limited and had multiple insurance policies with Life India Corporation, amounting to a total of Rs. 2,55,000. Following the tragic murder of her husband, the woman dutifully informed the insurance company and provided all necessary documents. Despite her efforts, the insurance company did not process the claim. In response to the delay, the woman sought legal assistance and demanded that the insurer process the claim. The insurer responded by denying receiving any notification and asked for the original policy bonds and death certificate, which the woman felt was just a way to buy time. Frustrated, she took her complaint to the District Forum, which ruled in her favor. However, the insurance company appealed to the State Commission, which threw out the appeal. The company then took the case to the National Commission.
The insurer’s main argument was that the insured individual had voluntarily retired and stopped paying premiums, resulting in the policy becoming inactive. It was also pointed out that the insured individual was not receiving a salary, making it impossible for the employer to pay premiums. The insurer insisted that the insured individual should have maintained the premium payments after reviving the policy but failed to provide any evidence of him receiving a salary. They also contended that they were not responsible for informing the insured about the default in premium payment, especially after his voluntary retirement.
The Commission noted that the insurer’s main contention was that the policies had lapsed due to non-payment of premiums after the insured voluntarily retired. According to the policy terms, the policies would indeed lapse if premiums were not collected or remitted by the employer. However, the Commission referred to past judgements where the Supreme Court held that the employer was the agent of the insurer and thus, the insured could not suffer due to the employer’s failure to report employment cessation or remit premiums. The Commission also underscored that the insurer failed to inform the policyholder about the policy’s lapse or gaps in premium payments.
In conclusion, the Commission ruled that the insurer and the employer were equally responsible for paying the benefits under the policies since the insurer did not inform the insured about the policy’s lapse. The revision petition lacked merit, and the decision of the District Forum was upheld.
The takeaway here is the importance of clear communication and due diligence in the insurance sector. The insurer can’t shift blame to the insured or the employer for non-payment of premiums, especially if they failed to inform the insured about the policy’s lapse.
