The National Consumer Disputes Redressal Commission (NCDRC) has directed Tata AIA Life Insurance Co. Ltd to refund ₹2.47 lakh, with an interest of 9% per annum, to a low-income family for mis-selling policies. The commission held the insurer accountable for misrepresenting 10-year premium liability policies as a one-time premium to the complainant, Gyan Prakash Singh, a retired employee from Lucknow.
Case Background
In June 2009, Tata AIA Life Insurance approached Mr. Singh with promises of high returns. An agent claimed that depositing a one-time premium would yield 1 to 1.5 times the deposit amount after just one and a half years. Trusting these assurances, Mr. Singh purchased five policies for himself, his wife, and his daughter, paying a total of ₹2.47 lakh (₹49,900 per policy).
However, upon receiving the policies 10 to 15 days later, Mr. Singh discovered they required a 10-year premium payment. This came as a shock, as his monthly income was just ₹1,514, making him financially incapable of continuing with the policies.
Complaint and Initial Action
Mr. Singh raised the issue with Tata AIA Life Insurance immediately, but the company did not act on his grievances. Despite multiple emails and letters, he received no meaningful response. The insurer refused a refund, citing the freelook period, during which policy cancellations must be initiated.
As a partial resolution, Tata AIA Life Insurance issued a cheque for one-fifth of the amount deposited for one policy. Mr. Singh refused to accept it, arguing that this was inadequate and unjust.
In 2013, Mr. Singh filed a complaint with the Lucknow District Consumer Disputes Redressal Forum, seeking a full refund with 12% interest, ₹1 lakh as compensation, and ₹25,000 for legal costs.
District Forum’s Decision
On December 10, 2014, the district forum ruled in favor of Mr. Singh, finding Tata AIA Life Insurance guilty of:
- Deficiency in Service: Mis-selling policies through false information.
- Unfair Trade Practices: Enticing Mr. Singh with misleading claims.
The forum ordered the insurer to:
- Refund ₹2.47 lakh with 9% simple interest per annum after deducting processing charges.
- Pay ₹10,000 as compensation and ₹5,000 in litigation costs.
Appeals and Rejections
State Commission Appeal
Tata AIA Life Insurance appealed the district forum’s decision to the Uttar Pradesh State Consumer Disputes Redressal Commission, arguing procedural lapses and time-barred complaints. However, the state commission upheld the district forum’s order, emphasizing:
- The policies were sold under false pretenses by the insurer’s agent.
- The complainant’s financial capacity made the policies impractical.
- The insurer failed to properly respond to the complaint, indicating a deficiency in service.
NCDRC Revision Petition
Aggrieved by the state commission’s order, Tata AIA Life Insurance filed a revision petition with the NCDRC, contending that:
- The complaint was filed beyond the freelook period and should be dismissed.
- The district forum decided the matter ex parte due to the absence of a written reply from Tata AIA’s counsel.
However, the NCDRC rejected these arguments, citing the insurer’s failure to present new evidence or valid grounds for reconsideration.
NCDRC’s Observations and Final Decision
Presiding member AVM (Retd.) J Rajendra concluded that both lower fora rightly identified the insurer’s misconduct. The NCDRC noted:
- Scope of Revision: The Commission’s jurisdiction is limited and cannot overturn concurrent findings without material irregularity.
- Freelook Period: The lower fora appropriately addressed this issue, and no new evidence warranted revisiting the claim.
The NCDRC dismissed the petition but modified the earlier order, setting aside the ₹10,000 compensation for mental agony, citing a Supreme Court ruling against multiple compensations for a singular deficiency.
Implications of the Order
The NCDRC’s ruling highlights the importance of transparency in insurance sales and reinforces protections for consumers against unfair trade practices. By holding Tata AIA Life Insurance accountable, the order serves as a precedent for similar cases involving mis-selling and negligence.
Conclusion
The case underscores the need for ethical practices in the insurance sector and vigilance among policyholders. The ruling ensures justice for Mr. Singh while signaling to insurers the legal consequences of misrepresentation and non-compliance with consumer protection laws.
