HDFC Standard Life asked to pay Rs 60K compensation for unfair practice

Hyderabad: Hyderabad Consumer Dispute Forum has directed HDFC Standard Life Insurance Company to pay Rs 60,000 as compensation to a customer for unfair trade practice and breach of contract. The Forum has also asked the insurance company to refund Rs 85,900 with an interest of 12 per cent.

The complainant, C.B. Laxman Rao Shabad, a resident of Yousafguda had obtained HDFC Life Sanchay Policy, with an assured amount of Rs.1,18,692 by the insurer after the maturity of the policy.

The five-year policy was purchased in February 2014 and was valid till February 2019. The half-yearly premium was fixed at Rs.15,000.

The complainant had paid a total premium of Rs.1,35,000 for four and a half years till July 2018, when HDFC Standard Life suddenly issued a letter to the complainant informing foreclosure of his policy.

The company adjusted surrender value towards outstanding loan of the complainant and returned remaining surrender value amount of Rs.13, 263, which was way below the guaranteed surrender value of the policy.

“Aggrieved by the premature foreclosure and cancellation of the policy despite paying the premium regularly, I have filed this complaint in consumer forum,” said CB Laxman Rao Shabad.

The insurance company, while admitting the factual aspects of the case in consumer forum, denied deficiency of service or unfair trade practice on their part contending that the complainant's policy was foreclosed as per the terms and conditions of the loan agreement and hence rightly refunded an amount of Rs.13,263 after adjusting Rs.58,569 towards the outstanding loan amount of the complainant.

The complainant filed an affidavit reiterating the averments including the foreclosure letter, annual premium statements and a copy of the legal notices served. While the opposite party filed the original policy, terms, and conditions of the loan against the policy and Foreclosure Letter in support of their written version besides counter affidavit.

After going through the evidence and hearing the arguments from both sides, the Forum said: “As per Regulation of the Protection of Policy Holders' Interests Regulations, 2002, which provides that cancellation can be made only on grounds of misrepresentation, fraud, nondisclosure of material facts or non-cooperation of the insured, this Forum is of the opinion that the auto-foreclosure of the policy despite regular payment of premium by the complainant is not only arbitrary but amounts to unfair trade practice and breach of contract.”

The Forum asked the insurance company to refund Rs 85,900 with the interest of 12 percent per annum from the date of realization from the total premium amount of Rs 1,35,000 received under the Insurance policy after deducting the net loan amount of Rs.58,569. The Forum also asked to pay a compensation of Rs 50,000 and Rs10,000 towards costs of litigation.