Consumer Commission Holds Insurance Company Liable For Denying Claim For Non-Issuance Of Policy After Accepting Premium

The District Consumer Disputes Redressal Commission, Ernakulam presided by Shri.D.B.Binu (President) , Shri. V.Ramachandran (member) and Smt.Sreevidhia.T.N ( member ) held M/s SBI General Insurance Co. Ltd liable for deficiency in service and unfair trade practice for their failure to issue the policy after accepting the premium and subsequently denying the claim on the basis of non-issuance of the policy .Facts of the Case:The complainant is an account holder of State Bank of India, opposite party No.2 . SBI introduced the complainant a health insurance policy from M/s SBI General Insurance Co. Ltd, opposite party No.1and submitted his insurance application through their representative on 03.12.2022. The complainant paid a premium of Rs. 10,502/- on 14.12.2022 for the policy with a sum insured of Rs. 3,00,000/-. Despite repeated requests, the complainant did not receive the policy identity card, citing a technical error.On 07.05.2023, the complainant suffered a fall, leading to severe back pain and weakness of the lower limb. He was admitted to Aster Medicity on 22.05.2023 and diagnosed with Right Cingulate Glioma. He underwent Right Fronto Awake Craniotomy on 25.05.2023, incurring treatment expenses of Rs.4,65,485/-, When a cashless claim was submitted, the SBI General Insurance denied it, stating that the policy was not issued due to a plan change. The premium amount was refunded on 26.05.2023 to the complainant.The complainant approached the consumer commission alleging deficiency in service and unfair trade practice by the opposite parties and sought Rs.3,00,000/- as the insured amount with 12% interest from the date of claim, Rs.50,000/- as compensation and the cost of the proceedings.On receipt of the notice , Insurance company O.P No.1 failed to file their version within the statutory period and was consequently set ex parte.Contention of the Opposite Party :SBI through their written version stated that the complaint is not maintainable against it as the dispute is solely between the complainant and the First Opposite Party (the insurance provider). SBI admitted that as per the complainants request, the health policy premium of Rs.10,502/- was transferred from the complainant's account to the insurance company on 14.12.2022. SBI further added that they acted only as a payment facilitator and had no role in the issuance of the policy.Observation by the Commission:The Commission observed that the insurance company's conscious failure to file their written version in spite of having received the Commission's notice amounts to an admission of the allegations levelled against them. It added that the denial of the claim, despite payment of the premium and failure to issue the policy, constitutes a valid cause of action. The act of accepting the premium and failing to issue the policy amounts to a clear case of deficiency in service and unfair trade practice under Section 2(11) and Section 2(47) of the Consumer Protection Act, 2019.The Commission observed that the bank is not liable for any deficiency in service as it was acting as an intermediary or payment facilitator and cannot be held liable for the insurer's failure to issue the policy or honour the claim.The Commission held the Insurance company is liable for deficiency in service under Section 2(11) and unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019 for their failure to issue the policy after accepting the premium and subsequently denying the claim on the basis of non-issuance of the policy .The Commission directed the Insurance Company to pay Rs. 3,00,000/- to the complainant , Rs.10,000/- as compensation and also Rs. 5,000/- towards the cost of the proceedings.Click Here To Read/Download Order

Consumer Commission Holds Insurance Company Liable For Denying Claim For Non-Issuance Of Policy After Accepting Premium

Sindhu.T.P

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