Unjustified Repudiation Of Valid Claim, Bihar State Commission Holds Bajaj Allianz Life Insurance Co. Liable

Brief Facts:

The deceased had taken a life insurance policy from Bajaj Allianz Life Insurance Company Ltd. (“Insurance Company”). The policy was for a sum assured of Rs. 7.98 Lakh, with a death benefit of Rs. 19.95 Lakh. He paid the first premium of Rs. 1,21,062/-, and after a medical examination by the Insurance Company's panel doctor, his health status was certified as good. Consequently, the Insurance Company accepted the proposal, and the policy commenced on 23.07.2015. Later, the deceased passed away at his home due to a heart attack. The deceased's wife (“Complainant”) notified the Insurance Company of his death and submitted a claim for the death benefit. The Insurance Company issued a claim notification, but subsequently, it repudiated the claim, citing non-disclosure of pre-existing medical conditions.

The Complainant appealed the repudiation decision to the Claim Review Committee. Aggrieved by the delay in the aforementioned review, she filed a consumer complaint before the State Consumer Disputes Redressal Commission, Bihar (“State Commission”).

In response, the Insurance Company contended that during the investigation following the death claim, it was discovered that the deceased had a history of pre-existing conditions, including hepatitis, jaundice, and diabetes. The Insurance Company's investigator obtained medical records from Dr Keshwar Prasad, indicating that the deceased had been treated for these conditions earlier in 2015. Pathological reports also confirmed abnormal levels of blood sugar and bilirubin, supporting the diagnosis of these diseases before the policy proposal.

Observations of the State Commission:

The State Commission observed that both parties agreed that the deceased had submitted a proposal form for a life insurance policy, which was accepted after a thorough medical examination conducted by the Insurance Company's panel doctor. The medical tests, including sugar levels, were found normal, and the panel doctor certified the deceased insured as being in good health.

The deceased died 22 days after the policy commencement due to a heart attack, and the Complainant filed a death claim. As the claim was early, the Insurance Company initiated an investigation, during which it alleged that the deceased had pre-existing conditions—hepatitis, jaundice, and diabetes. The Insurance Company argued that this information was deliberately suppressed.

However, the State Commission held that the burden of proof lay with the Insurance Company to establish that the deceased was aware of his pre-existing conditions and intentionally concealed them. The investigation conducted by the Insurance Company was based on medical prescriptions and pathological reports, but neither the investigator nor the doctor who allegedly treated the deceased submitted affidavits to verify the authenticity of these documents. The State Commission also observed that the investigator failed to provide credible sources or witnesses to confirm how the documents were obtained. Additionally, there was no proof of the deceased being hospitalized for the alleged diseases.

The State Commission also noted that the pathological tests conducted by the Insurance Company showed the deceased's health to be normal. Therefore, the tests contradicted the claim that he was suffering from serious illnesses. Furthermore, the pre-existing conditions mentioned by the Insurance Company were not directly linked to the heart attack endured by the deceased. Therefore, the State Commission held that suppression of a disease unrelated to the cause of death cannot justify repudiation of a claim.

Conclusively, the State Commission directed the Insurance Company to pay Rs. 19,95,000/- with 8% interest to the Complainant.

Case Title: Shabra Khatoon vs Bajaj Allianz Life Insurance Company Ltd. and Anr.

Case No.: Complaint Case No. 44 of 2017

Advocate for the Complainant: Mr Anil Kumar

Advocate for the Opposite Party: Mr Abhay Kumar Sinha

Date of Pronouncement: 09.09.2024