SHIVAMOGGA: The District Consumer Disputes Redressal Commission has ruled that the Life Insurance Corporation of India (LIC) should compensate complainants Bhagya and Nagaraj after the insurer denied an insurance claim related to their late brother’s policies, citing a deficiency in service.
Bhagya and Nagaraj had filed a complaint against LIC officials, including the first respondent, the zonal manager of LIC of India in Hyderabad, and the second respondent, the senior divisional manager of LIC India at the Shivamogga divisional office, along with others.
The complainants stated that their late brother, Shivu, had purchased 10 insurance policies with a sum assured of Rs 1 lakh each and one policy worth Rs 2.5 lakh.
Following Shivu’s death due to a heart attack, the complainants approached LIC to claim the insurance amount, submitting all required documents. However, LIC rejected the claim, arguing that the deceased had concealed pre-existing medical conditions at the time of purchasing the policies. Citing this as a violation of policy terms and conditions, the respondents informed the complainants that the claim stood invalid.
Subsequently, Bhagya and Nagaraj filed a case with the district consumer commission, which issued notices to LIC and the named officials. While some respondents, including the first respondent, failed to appear before the commission, the second respondent attended the proceedings through legal representation. LIC’s legal counsel contended that the complainants had deliberately suppressed information about Shivu’s prior health conditions and fraudulently obtained 11 insurance policies.
The counsel further argued that the rejection of the claim was in line with LIC’s policy terms and that the insurer had not committed any deficiency in service.
After examining the evidence, hearing arguments from both sides, and considering relevant Supreme Court rulings, the commission determined that LIC had not provided sufficient grounds to justify its denial of the claim. The commission ruled that the rejection of the claim amounted to a deficiency in service and partially upheld the complainants’ case.
The commission, presided over by T Shivanna and member B D Yogananda Bhandya, directed LIC to pay Rs 12.5 lakh as the sum assured for the 11 policies. The order stated that the amount must be paid within 45 days from the date of the ruling, along with an interest of 9%. In case of further delay, LIC must pay an increased interest of 12% until the full settlement is made.
In addition to that, the commission ordered LIC to compensate the complainants with Rs 30,000 for the mental distress caused due to the claim rejection and Rs 10,000 as reimbursement for legal expenses. The order was issued recently.