Insurance Claim Cannot Be Denied For Unrelated Health Issues: Chandigarh State Commission Holds Bajaj Allianz Life Insurance Liable

Brief facts:

The complainant's mother obtained a personal loan of Rs.2,59,000/- from Bajaj Finserv Limited. While advancing the loan, the deceased was compelled to avail complimentary Group 'Term Life Insurance' that included death claim of Rs.3,50,000/- by CPP Group India. The policy was issued by Bajaj Allianz life insurance company Ltd.(appellant) and it was valid from 17.2.2020 to 16.2.2021.

During the subsistence of policy, the complainant's mother died due to sepsis with septic shock on 28.12.2020. Later, the complainant submitted the claims with Bajaj Allianz life insurance but they rejected it on the grounds of non-disclosure of material fact. Being aggrieved, the complainant filed a complaint in the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh for deficiency in service and unfair trade practice.

In response the appellant contended non-disclosure of diabetes and hypertension for which the deceased was undergoing treatment since 2014. Bajaj Finserv Limited denied allegations as it had no role in rejection of claim as it was a mere facilitator. Subsequently, CPP Group India denied the complaint as it was not an insurance company but a mere facilitator.

Through an order dated 14.04.2024, the District Commission directed the appellant to pay Rs.3,50,000/- with interest 9% interest along with Rs.10,000/- as compensation for mental agony and Rs.10,000/- as litigation costs. Dissatisfied by the order, the appellant filed an appeal before the State Commission.

Contentions of Bajaj Allianz life Insurance Company:

The appellant contended that the District Commission has failed to consider the documentary evidence, resulting in perverse finding. Further, it stated that the order ignored the suppression of material facts by the complainant.

Observation of the State Commission:

The commission observed that the loan was taken after careful consideration by the complainant for his mother via tele-caller from Bajaj Finserv Ltd. According to investigation report, the relatives confirmed that the deceased was suffering from medical issues from long time. However, there was no documentary evidence to prove that the deceased was suffering from such diseases at the time of enrolment of the insurance policy.

Further, the previous medical condition of the deceased was not directly related to the cause of death. Reliance was placed on Neelam Chopra Vs. Life Insurance Corporation of India & Ors., IV (2018) CPJ 321 (NC) wherein it was held that repudiation of claim is unjustified if the pre-existing disease is not the main cause for death.

Additionally, the commission reaffirmed the order of the district commission that the appellant's failure to conduct prior examination before issuing the policy constituted deficiency in service.

Therefore, the State Commission dismissed the appeal and upheld the decision of the District Commission.

Case title: Bajaj Allianz life insurance company Ltd. vs Sunny Bhatia & Ors.

Case No: First Appeal No. 137/2024

Date of Pronouncement: 27.11.2024

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