NCDRC Upholds Orders Against Insurance Firms, Dismisses 2 Appeals For Deficiency In Service

The National Consumer Disputes Redressal Commission (NCDRC) has dismissed two separate appeals filed by insurance companies, upholding the orders passed by State Consumer Commissions and directing the firms to compensate the insured parties.

The NCDRC, while rejecting the appeals, observed that the State Commissions had delivered “well-reasoned orders,” and there was no ground for interference.

“After careful consideration of the orders of the State Commission, relevant records, and the contentions of the insurance companies, we are of the considered view that the State Commission has passed a well-reasoned order and we do not see any reason to interfere with its findings,” the bench noted.

HDFC Life Directed To Pay ₹25 Lakh To Policyholder’s Widow

In the first case, HDFC Life Insurance Company Limited had challenged an order of the Gujarat State Consumer Disputes Redressal Commission (SCDRC) that directed it to pay Rs 25 lakh to Jumaben Kalaji Marwadi, along with 7% interest from 2015.

The dispute arose after Jumaben’s husband, who held a life insurance policy of Rs 25 lakh, died in April 2014, a few months after the policy commenced. The company repudiated the claim alleging non-disclosure of pre-existing health conditions, claiming that the deceased had undergone medical tests in 2012 and suppressed material facts regarding his health and income.

The NCDRC, however, upheld the SCDRC’s order, ruling that the insurer failed to prove suppression of material facts. Citing the Supreme Court’s judgment in LIC of India vs. G.M. Channabasamma (1991) 1 SCC 357, the commission emphasized that the onus of proving concealment lies with the insurer.

The bench noted that except for a prescription dated January 17, 2012, advising certain tests, HDFC Life had not produced any medical evidence showing that the deceased was suffering from any disease prior to taking the policy. “This prescription by no means establishes that the deceased was suffering from pre-existing diseases,” the order stated.

The commission concluded that HDFC Life failed to justify its repudiation and directed the company to honor the policy as ordered by the State Commission.

Niva Bupa Ordered To Pay ₹9.20 Lakh And Additional Compensation

In the second case, Niva Bupa Health Insurance Company had filed an appeal against a Bengaluru-based complainant, Vishnu Deo Dubey, contesting an order that enhanced the compensation amount.

The insurer argued that Dubey had failed to disclose pre-existing conditions, including a history of urinary tract symptoms (LUTS), and that the State Commission’s order disregarded policy terms and the principle of utmost good faith. The company claimed that it had already paid Rs 4.81 lakh as ordered by the District Commission, while the remaining claim of Rs 9.20 lakh was outside policy coverage.

However, the NCDRC rejected these contentions, holding that both the District and State Commissions had correctly found deficiency in service. It observed that the insurer’s repudiation letter merely stated that the “main claim [was] rejected” without providing valid reasoning or evidence.

The State Commission had examined the complainant’s medical records, hospital bills, and receipts totaling Rs 9.62 lakh and concluded that the insurance company had wrongfully denied legitimate claims. It directed Niva Bupa to pay the remaining Rs 9.20 lakh, along with 6% annual interest from August 4, 2016, until realization.

Additionally, the insurer was ordered to pay Rs 32,000 as loyalty bonus, with the same interest rate, and Rs 50,000 towards litigation expenses.

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NCDRC Emphasises Accountability And Evidence-Based Adjudication

The NCDRC affirmed that both State Commissions had passed “well-reasoned, evidence-based orders” and that the insurance firms failed to substantiate their claims of misrepresentation or policy violation.

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