Banks Must Inform Customers About Discontinuation Of Insurance Policies Obtained Through Them, Ludhiana District Commission Holds Canara Bank Liable

Brief Facts:

The Apollo Munich Health Insurance Company Ltd. (“Insurance Company”), which was previously collaborating with Canara Bank, offered Group Insurance benefits to the bank employees and account holders at concessional rates. The Complainant, holding an account with Canara Bank, was enticed by representatives of the insurance company to avail of a family floater health/medical insurance policy. Consequently, the Complainant obtained an insurance policy, maintaining continuous premium payments via auto debit from his savings account. The Complainant never opted to cancel the policy and was unaware of the insurance company's termination of collaboration with Canara Bank. Allegedly, the insurance company unilaterally cancelled the policy without notice, leading the Complainant to request redemption with continuity and the same terms. The insurance company rejected this plea. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Ludhiana (“District Commission”) and filed a consumer complaint against the insurance company and Canara Bank.

In response, the insurance company, now known as HDFC ERGO General Insurance Company Limited, argued that the Complainant, a Canara Bank customer, obtained a tailor-made Easy Health Group Insurance offered exclusively to existing Canara Bank customers. It presented an enrollment form, claiming that the insurance policy was issued from 05.01.2017 to 30.04.2018, with renewal from 01.05.2019 to 30.04.2020. It contended that in April 2020, the arrangement with Canara Bank for the Easy Health Group Insurance Plan concluded, and it duly informed Canara Bank, which posted public notices about policy discontinuation. It denied any misrepresentation, asserting that the Complainant filed a false complaint to harass them.

Canara Bank didn't appear before the District Commission for the proceedings.

Observations by the District Commission:

The District Commission noted Canara Bank, acting as an intermediary, enrolled the Complainant, a savings bank account holder, into the "Easy Health Group Insurance" policy with a coverage period. It noted that the insurance company directed Canara Bank to inform policyholders about the discontinuation, but it failed to do so. Therefore, it held Canara Bank liable for a deficiency in service, which, acting as a corporate agent, failed to discharge its duties.

Consequently, the District Commission directed Canara Bank to pay a composite compensation of Rs. 10,000/- to the Complainant within 30 days. The complaint against the insurance company was dismissed by the District Commission.

Case Title: Lakhwinder Singh vs The Apollo Munich Health Insurance Company Ltd and Anr.

Case Number: 172/2021

Advocate for the Complainant: Shamsher Singh Lohat

Advocate for the Respondent: Ajay Chawla and Rahul Singla

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