The Jammu and Kashmir State Consumer Disputes Redressal Commission, Srinagar, comprising President (Officiating) Nighat Sultana and Member Maheep Gupta, has held Bajaj Allianz General Insurance Company Ltd. liable for deficiency in service after it deducted a portion of an insurance claim despite the surveyor assessing the flood-related losses at a higher amount.

The Commission found that the insurer failed to produce documentary evidence supporting the deductions or establishing the complainant's consent to a negotiated settlement and directed it to pay the differential claim amount along with compensation for delay and litigation costs.

Brief Facts:

The complainant, Showkat Ahmad Mir, a resident of Batapora, Khanabal, Anantnag, filed a consumer complaint against Bajaj Allianz General Insurance Company Ltd. and Jammu and Kashmir Bank Ltd., alleging deficiency in service over the settlement of an insurance claim arising from flood damage to his insured business unit. The complainant stated that his business unit suffered losses due to floods during the currency of the insurance policy. The loss was assessed by the insurance company's surveyor, Tahir Ahmad Shah, at ₹44,56,374 through an assessment report dated June 16, 2015.

The insurance company subsequently settled the claim in May 2017 by paying ₹36.90 lakh to the complainant. Aggrieved by the deduction of ₹7,66,374 from the surveyor-assessed loss, the complainant approached the Jammu and Kashmir State Consumer Disputes Redressal Commission, Srinagar, seeking payment of the deducted amount, along with interest at 12.40%, compensation of ₹1.50 lakh for unfair trade practices and ₹50,000 towards litigation expenses.

Contentions of the Insurance Company:

The insurance company contended that the complainant had been asked to submit sale and purchase bills, VAT returns and other supporting documents but had opted for a negotiated settlement instead. It claimed that he had agreed to accept ₹37 lakh as full and final settlement and submitted a discharge voucher. After deducting a reinstatement premium of ₹10,000, the company paid ₹36.90 lakh through a cheque dated May 22, 2017. The complainant, however, denied agreeing to any such settlement or being asked to furnish the documents.

Observation and decision:

The Commission observed that although an insurance company is entitled to modify or discard an assessment made by an IRDA-authorised surveyor, any such deduction must be supported by justified reasons. The Commission noted that the surveyor, Tahir Ahmad Shah, had stood by his original assessment of the loss at ₹44,56,374 and had expressed ignorance regarding the subsequent deductions made by the insurance company.

The Commission observed that the insurance company failed to produce any documentary evidence showing that additional documents were sought or that the complainant had agreed to a negotiated settlement. It also found that the claim file contained neither relevant correspondence nor a discharge voucher. Accordingly, it rejected the company's contentions and held it liable for deficiency in service.

The Commission allowed the complaint and directed Bajaj Allianz General Insurance Company to pay ₹13,50,333 to the complainant, including the differential claim amount, compensation for delay calculated at 8% annual interest and litigation expenses. The amount was directed to be paid within 30 days, failing which the company would be liable to pay further interest at 8% per annum until realisation.