Mysore District Commission Holds Kotak Mahendra Insurance Co Liable For Dishonouring Policy Terms

Brief Facts:

The Complainant procured a 20-year policy from Kotak Mahendra Life Insurance Co. Ltd. (“Insurance Company”) with a premium payment term of 10 years at an annual rate of Rs. 51,126/-. Having paid five annual premiums totalling Rs. 2,55,630/-, the Complainant stated that he would be unable to continue payments due to unforeseen circumstances. Seeking a refund of the paid amount, he alleged that despite repeated attempts, the insurance company evaded resolution. The Complainant made several communications with the insurance company but didn't receive a satisfactory response. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Mysore, Karnataka (“District Commission”) against the insurance company.

In response, the insurance company contended that the Complainant's plea for a refund and additional compensation of Rs.1,00,000/- was unwarranted and contrary to the policy's terms. It argued that under the policy's conditions, the complainant was eligible only for a surrender value after three years of premium payment. It denied any deficiency in service, arguing that the Complainant was aware of and accepted the policy terms. Further, it maintained that the Complainant was estopped from contesting policy terms after paying premiums for more than three years.

Observations by the District Commission:

The District Commission noted that the Complainant didn't produce the policy document itself, but the insurance company submitted a copy of the policy. It noted that the policy outlined that the insured had the option to cancel the policy within 15 days of receipt. Since the Complainant did not exercise this option, the policy terms stipulated that he cannot surrender the policy and claim a refund unless the full term of 20 years is completed. The District Commission noted that the policy deposit receipts confirmed that the Complainant made payments for 5 annual premiums totalling Rs. 2,55,630/-.

Although the policy duration was 20 years and premium payments were due for 10 years, the District Commission noted that the Complainant only paid for 5 years. However, the District Commission noted that according to the policy terms and conditions, the insurance company was obligated to refund at least 20% of the sum assured under these circumstances. It held that the insurance company failed to fulfil this obligation. Therefore, the District Commission held the insurance company liable for deficiency in services.

Given that the sum assured was Rs. 6,25,962/- and considering the Complainant paid 5 annual premiums of Rs. 51,126/- each, the District Commission directed the insurance company to refund Rs. 1,25,192.40/- to the Complainant, which amounted to 20% of the sum assured. Additionally, the insurance company was directed to pay a compensation of Rs. 25,000/- for mental agony and deficiency in service, along with litigation expenses of Rs. 10,000/- to the Complainant.

Case Title: P. Shantharamu vs M/s. Kotak Mahendra Life Insurance Company Ltd.

Case Number: 345/2023

Date of Pronouncement: 15.06.2024