Consumer Forum asks insurers to compensate policy holders

The Oriental Insurance Company Ltd will have to reimburse Anil Rajgarhia Rs 4.23 lakh for the losses caused for cancelling his bonus points he earned while renewing the policy. The New India Assurance Company Ltd will have to pay Rs 4 lakh to Sham Sunder Makkar for expenses incurred during a bypass surgery.

Rajgarhia bought the policy in 1995 and continued to renew it till 2010. According to the rules, he was supposed to get 5% cumulative bonus for every year. But after 2005-06, when Rajgarhia had collected Rs 4.23 lakh in bonus, the insurance company unilaterally cancelled it.

After repeated requests, the firm finally said the step was taken due to an amendment in the policy. But Rajgarhia claimed that for four years, he was never told about the new terms and he learned about it only after filing an application under the Right to Information Act.

In 2009, he filed a complaint at the consumer forum; with the insurance firm not filing a reply, the order was passed ex parte. The forum said the company made the changes with the consent of the insurance regulatory authority and as such, it could not interfere with the terms and conditions of the contract.

But, it said, as the firm was vague about the benefits the insured would receive in lieu of the bonus, it would have to reimburse Rajgarhia. The firm will not have to pay Rajgarhia in cash but will have to allow him to renew his policy annually by paying Rs 100 only and it will also have increase him limit of indemnity.

The forum also ordered the firm to pay him Rs 15,000 for causing mental agony and as the cost of the complaint.

Makkar bought his insurance in 2000. In 2009, he underwent a bypass surgery, following which, he filed a claim. But the application was repudiated on the grounds that Makkar’s ailment pre-existed. Makkar lodged a complaint in the forum in May 2010.

In its defence, the insurance firm said while filling the policy form, Makkar had not mentioned that he had been suffering from diabetes for 15 years. But the forum said the hospital discharge papers had no mention of the period from which Makkar had been suffering from diabetes. “In absence of evidence that he has been suffering from diabetes for 15 years, the opposite party’s (insurance company) contention cannot be taken into consideration,” the forum said. Makkar will also receive Rs 71,000 in interest and Rs 8,000 towards mental agony and costs of complaint.