SC pulls up Max Life Insurance and Axis Bank for conduct against good faith standards

Ads promoting insurance policies often come with sentimental pitches aimed at winning a client's trust, with assurances of support in a crisis or emergency. Which is why rejection of a claim right after an accident or when one has to pay hefty medical bills, feels a lot like a betrayal. In one such case the Supreme Court has accepted a plea against an insurer that has rejected a claim after giving a back-dated letter to defer procedures, since they came to know about the death of the insured person.

According to the judgment, Max Life Insurance Corporation has been instructed to process the insurance claim of the apellant, and pay them what's due. The judge noted that it was suprising that the information of the death triggered the insurance firm to defer the insurance process, followed by a refund of the premium and repudiation.

The court also pulled up the insurer for malafide intent over their handling of the situation, after learning that the insured person had died. It also observed deficiency of service and a non-bonafide conduct on the part of the insurer.

The reason behind the appeal was a home loan from Axis Bank, which was secured on the condition of getting a life insurance policy in the name of Gokal Chand, who has now died. The plea alleged that the bank acted as an agent for insurance company, and an insurance premium of Rs 6,24,172 was paid on behalf of the insured Gokal Chand by the bank to the insurance company from the sanctioned loan.