Need To Treat Identical Insurance Claims Similarly, Kullu District Commission Holds HDFC Life Insurance Co. Liable For Unfair Trade Practice

Brief Facts:

Mr. Rajiv Sharma (“Complainant”) based on the representation and assurance of agents of HDFC Life Insurance (“Insurance Company”), purchased an insurance policy named HDFC Life Pension Super Plus Policy. The agent of the insurance company assured the Complainant that he would receive the full value of the investment after the lock-in period of five years. The Complainant paid the premiums as scheduled by the insurance company. Due to financial difficulties arising from the Covid-19 pandemic, the Complainant approached the insurance company after the lock-in period stating that he has been facing financial disability to pay the premium for the insurance and claimed the full value of the investment. However, the insurance company refused to pay the claim stating that he would only receive pension benefits, not the full value of the policy. The Complainant stated that he had purchased another policy for his wife under the same scheme, and when faced with financial difficulties, the insurance company refunded the full value of his wife's policy. The Complainant made several communications with the insurance company but didn't receive any satisfactory reply. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Kullu, Himachal Pradesh (“District Commission”) and filed a consumer complaint against the insurance company. The Complainant contended that due to financial constraints resulting from the COVID-19 pandemic, he sought to surrender the policy after the five-year lock-in period, expecting the full value as promised by the insurance company representative.

In response to the complaint, the insurance company contested by raising preliminary objections regarding the alleged false nature of the complaint, the cause of action, maintainability, and the complex nature of the dispute. It contended that the Complainant was informed about the free look period and the policy's terms and conditions. According to these terms, the Complainant had options related to withdrawal and annuities. It argued that the Complainant, after completing the lock-in period of five years, surrendered the policy, entitling him only to the surrender value. Therefore, the insurance company argued that the Complainant was only entitled to the surrender value of the policy after five years, as per the policy terms and conditions.

Observations by the Commission:

While acknowledging that the policy's terms and conditions do not explicitly guarantee the Complainant the full value after five years, the District Commission noted that the Complainant purchased the same policy for his wife, and the insurance company paid her the full value after five years, considering the Complainant's financial difficulties during the Covid-19 pandemic.

The District Commission noted that the insurance company, in its reply, explicitly admitted to compensating the wife of the Complainant for her policy, taking into account the financial problems faced by the Complainant. The District Commission emphasized that the Complainant purchased both policies, and the terms and conditions were identical. Therefore, the District Commission concluded that the insurance company, having granted concessions to the wife based on financial considerations, cannot selectively deny the Complainant similar concessions.

Consequently, the District Commission found the insurance company liable for rejecting the Complainant's request and held it liable for unfair trade practice and deficiency in service. The insurance company directed the insurance company to pay the Complainant the value of the policy within 45 days, strictly following the case of his wife. Additionally, the District Commission ordered the insurance company to pay damages of ₹ 10,000/- on account of mental harassment and agony to the Complainant. It was also directed to pay ₹ 5,000/- for litigation costs incurred by the Complainant.

Case Title: Rajiv Sharma vs Branch Manager, HDFC Life and Anr.

Case No.: Complaint No.: 01/2021

Advocate for the Complainant: Mohinder Thakur

Advocate for the Respondent: Shamsher Thakur

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