Anil Kumar, a cloth merchant, had taken four policies from Life India Insurance Corporation (LIC). The first two policies of Rs 5 lakh each were taken in the year 2003. In 2005, he took the third and fourth policies of Rs 12 lakh and Rs 4 lakh respectively.
The total coverage under the four policies came to Rs 26 lakh. His father Vijay Pal Singh was the nominee in all the policies.
Anil died in a road accident on July 31, 2006. His father Vijay lodged claims under the four policies, but not a single one was settled despite reminders and followup. So Vijay filed a complaint before the Uttar Pradesh consumer commission.
LIC contested the case, stating that a thorough investigation was necessary as the claims were of high value. It agreed to settle claims of Rs 5 lakh each under the first two policies. However, two claims for the policies taken in 2005 were repudiated on the grounds that insurance coverage from HDFC Standard Life Insurance and TATA AIG Life Insurance were not disclosed while submitting the proposal form to LIC. The state commission partly allowed the complaint. Both Vijay, as well as LIC, appealed against the order.
The national commission relied on the Supreme Court decision that insurance fraud would be determined on the basis of the definition under the Insurance Regulatory and Development Authority (IRDA) Act alone, and that the explanation under the Contract Act would be irrelevant.
(The author is a consumer activist and has won the Govt of India's National Youth Award for Consumer Protection. His email is jehangir.gai.columnist@ outlook.in)
