Secunderabad: Consumer panel orders Reliance Nippon to honour insurance claim of Rs 56 lakhs by elderly woman

Hyderabad: The District Consumer Redressal Commission-III, Hyderabad, has directed Reliance Nippon Life Insurance Company to honour the insurance claim made to an elderly woman in Secunderabad. The commission ordered the firm to pay the assured claim of Rs 56 lakhs promised to the woman following her husband’s death.

Case details

Ravi Shankar Balasubramaniam (late), husband of Mahalakshmi Balasubramaniam, had purchased a policy titled ‘Reliance Nippon Life Premier Wealth Insurance Plan’, for an annual premium of Rs 8 lakh for five years.

The policy commenced on November 21, 2017, for a sum assured of Rs 56 lakh at the end of its term. Ravi Shankar paid two premiums totalling Rs 16 lakhs for over two years before passing away on October 18, 2019.

Although The policy explicitly stated that ‘this plan will secure the future of Mrs B Mahalakshmi’, Reliance Nippon Life Insurance did not honour the agreement. The counsel representing Mahalakshmi said that Reliance Nippon made warranties and representations promising to pay the assured sum of Rs 56 lakhs along with applicable benefits and bonuses.

The commission was informed that the representatives of the insurance company visited Mahalakshmi’s residence, and obtained signatures, passwords, and necessary personal, health, and financial information for the claim.

Medical evaluation filed with claim

An executive of the insurance company named Manoj had assured Mahalakshmi that Rs 56 lakhs would be credited to her account. Ravishankar had also submitted the results of his medical test with the insurance company. Typically, such tests are conducted by diagnostic centres affiliated with the insurance company and policies are issued only after the completion and evaluation of these medical reports.

Additionally, the proposal form was filled online by the insurance company themselves, said the counsel.

“Mahalakshmi Balasubramaniam is entitled to live her life with dignity and to the benefits of the life insurance taken by her husband. No policy was obtained through concealment or non-disclosure of any facts. In fact, Ravi Shankar Balasubramaniam diligently paid the premiums for two years without fail. The insurance company deceitfully induced, misrepresented, and lured Ravi Shankar into paying Rs 16 lakhs,” the counsel said.

Company denies allegations

The representatives of the insurance company put forward their arguments in the case before the commission. Reliance Nippon Life Insurance, in its preliminary reply, denied all allegations. It explicitly stated that nothing in the complaint should be deemed admitted by or on behalf of the insurance company.

The company acknowledged receiving the summons from the commission, directing its appearance on March 9, 2023. However, it said that the notice was received late by the legal department. The company stated that the company has not received any copies of the complaint or its annexures. It denied all allegations made by Mahalakshmi and sought its right to file an additional detailed written statement to present facts and evidence before the commission, pending receipt of the complaint copy.

‘Insurer can’t reject claim on disclosed pre-existing condition’

During the enquiry, the commission noted that once an insurance policy has been issued following a thorough assessment of the insured’s medical condition, the insurer cannot reject a claim based on a pre-existing medical condition that was disclosed by the insured in the proposal form.

“If the disclosed condition is linked to the risk for which the claim is being made, the insurer is typically bound to honour the claim. This principle is often upheld to ensure fairness and adherence to the terms agreed upon in the insurance contract. It prevents insurers from unfairly repudiating claims based on information already known to them at the time of policy issuance,” the commission stated.

After listening to all the arguments, the commission said that Reliance Nippon Life Insurance’s repudiation of the policy claim based on non-disclosure of material facts, coupled with their willful failure to produce the original documents and medical reports requested by the complainant, despite directions to do so, constitutes a deficiency of service and unfair trade practice on the part of the insurance company. Therefore, Mahalakshmi Balasubramaniam is entitled to receive the claim amount along with compensation.

The commission ordered the firm to pay Rs 56 lakhs (with 9 per cent interest from February 25, 2020, till date of realisation), along with Rs 1 lakh as compensation for her mental agony and suffering and Rs 10,000 towards litigation costs.