Bangalore District Commission Holds Max New York Life Insurance Co. For Deficiency In Service, Orders To Pay Compensation And Legal Costs

Brief Facts:

Mrs. Lakshmy T Iyengar (“Complainant”) had acquired an insurance policy from the Max New York Life Insurance Company (“Insurance Company). The terms of the policy required monthly premium payments of Rs.1,006.56/-, commencing from October 6, 2004. The Complainant had set up an Electronic Clearing Service (ECS) arrangement with her bank for the automatic deduction of the monthly premiums from her account, which had sufficient funds to cover the payments.

However, a problem arose when, on February 7, 2008, the insurance company informed the Complainant that the insurance premium was due and unpaid. Despite the premiums being deducted through ECS, the insurance company claimed the premium was unpaid. When the Complainant contacted the insurance company, she was informed that the mistake occurred on the part of the insurance company itself by entering the wrong account number for the premium deductions twice. The complainant was assured that such mistakes would not be repeated.

Despite these assurances, again on October 6, 2009, the insurance company informed the Complainant that her insurance policy had lapsed due to non-payment of the premium. The Complainant attempted to rectify the situation by contacting the insurance agent through whom she had purchased the policy, but the company continued to demand the premium for January 2008, for which they had already apologized. The complainant and her family endured severe hardships due to the incessant calls from the insurance company's call centre, demanding payment of insurance premiums as if she were a defaulter. Feeling aggrieved, the Complainant filed a consumer complaint in the Additional District Consumer Disputes Redressal Commission-II, Bengaluru Urban, Karnataka (“District Commission”).

The insurance company contended that the complaint was filed with an ulterior motive by fabricating the relevant facts for making illegal gains. They categorically denied the allegations made by the Complainant and stated that the premium deductions bounced twice. Further, they denied the acknowledgement of the mistake on their part.

Observations by the Commission:

The District Commission noted that the insurance company negligently entered the wrong account number for the ECS, leading to the bouncing of premiums. After perusing the evidence presented by the Complainant, the District Commission observed that the root cause for the inconvenience, caused to the Complainant and her family, could be attributed to the insurance company.

Declaring deficiency of service on the part of the insurance company, the District Commission directed the insurance company to give a compensation of Rs 10,000/- to the complainant. Further, it also ordered the insurance company to pay Rs. 5,000/- as a cost of litigation to the complainant.

Case Title: Lakshmy T Iyengar vs Max New York Life Insurance Company Limited and others

Case No.: CC/1167/2012

Advocate for the Complainant: V.G. Bhanuprakash

Advocate for the Respondent: Girish. B. Manganna and A.R Desai

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