NCDRC Holds Bharati Life Insurance Liable For Deficiency In Service Due To Wrongful Repudiation Of Claim

Brief Facts of the Case

The complainant's late husband took an end use mortgage home loan from Punjab National Bank (PNB) Housing Finance with Bharti AXA Life Loan Secure policy and Bharti Axa Life Group Accidental Death Benefit Rider policy of the insurer. During the time of applying for the insurance he provided some questionnaires where he indicated that he had never taken any medical treatment for places such as hypertension or heart disease. A premium of Rs 1, 29,288.75 was too paid and the total policy period was defined as 84 months. The complainant's husband died, and the insurer rejected the claim since he was admitted for severe ailments in the past years including hypertension and coronary heart disease that were not disclosed on the questionnaire. The complainant then filed the complaint with the State Commission of Uttar Pradesh who allowed the complaint. Instead it ordered the insurer to refund the loan through insurance policy within two monthsSubsequently, the insurer moved to the National Commission.

Contentions of the Insurer

The insurer argued that the medical records produced did not associate the treatment in Metro Hospital with ailments provided in the claim denial while prescriptions showed that the DLA had heart problems. It alleged that the State Commission failed to consider the DLA's treatment history because she did not have a medical certificate and based its decision on a ruling that did not require treatment records from the treating doctors. The insurer stated that the DLA had concealed facts regarding pre- existing conditions and claimed that since the principle of utmost good faith is a condition precedent; the policy was consequently void. It stated that the cause of death was associated with these concealed diseases and that it operated within policy provisions; it denied the existence of a service shortfall as the examination demonstrated that the DLA was treated for severe heart ailments prior to applying for the policy.

Observations by the National Commission

The National Commission observed that these insurance policies were availed by the DLA with an intention to finance a home loan availed from Punjab National Bank Housing Finance. It also offered paid up group life insurance which covered an accidental death pay where there was only a single premium to be paid. This was highlighted with regard to the DLA, whereby no pre-existing diseases were reported in the questionnaire. The DLA died two years after the policy was issued and the insurer investigated this claiming that the admission and treatment papers from Metro Heart Institute showed that the insured had heart ailment. The insurer also claimed that these illnesses were known to the DLA and yet they were never disclosed at the time of issuing the policy proposal. However, the complainant argued that these photocopies were inadmissible without supporting affidavits. The State Commission concurred with the above findings and there was no misrepresentation and suppression of material information by the DLA and hence the insurers argument of policy avoidance due to concealment of pre-existing diseases was baseless. The National Commission also pointed out that the cause of death, according to the Death Certificate, should have been considered because the DLA died from esophageal cancer which led to cardiorespiratory failure. While referring to the case Satwant Kaur Sandhu Vs. Regarding New India Assurance Co. Ltd., the commission noted that the insurer did not present evidence that the DLA deliberately concealed relevant information.

Therefore, the appeal was dismissed and the order passed by the State Commission was confirmed and sustained.

Case Title: Bharti Axa Life Insurance Co. Ltd. & Anr Vs. Madhu Mishra & 3 Ors.

Case Number: F.A. No. 291/2022

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