Insurer must prove fraudulent claim

Dalbir Kaur had a policy from Bajaj Allianz Life Insurance to cover her son Kulwant Singh. She was also the nominee. The policy, which commenced on August 12, 2014, had a maturity value of Rs 8.5 lakh. The policy would also pay double the amount, in case of death of the policyholder.

On September 12, 2014, a month after commencement of the policy, Kulwant died a natural death at home. His mother lodged a claim, but the insurer repudiated it alleging that the policy had been obtained through misrepresentation and concealment of material facts.

Aggrieved, the 70-year old mother filed a complaint before the Taran Taran District Consumer Forum. The insurer contested the case and justified the repudiation, stating that the proposal did not disclose that Kulwant had been hospitalised overnight from July 13, 2014, to July 14, 2014, for vomiting blood.

The Forum overruled the insurer's objection and ordered it to pay the full death claim of Rs 17 lakh, along with Rs 10,000 towards compensation and costs. The insurer approached the Punjab State Commission which dismissed its appeal. Bajaj Allianz Life Insurance then went in revision.

The National Commission distinguished between ‘symptom’ that is evidence of a disease experienced by the patient and ‘sign’ that can be detected by someone else. Some conditions do not even show symptoms, such as a person might have high blood pressure for years without being aware of it, or certain cancers which show up at an advanced stage. It also distinguished between ‘disease’ as an affliction of a specific organ or the entire body and ‘illness’ as the body's reaction to the disease.

The Commission pointed out that for repudiating a claim, the onus is on the insurer to show that the insured had a pre-existing disease which had been concealed with fraudulent intent. It would also be necessary for the insurer to establish the nexus between the disease and the cause of death. So the Commission concluded that there was no concealment of facts.

It observed that Kulwant was a middle-aged person, who did not have any history of the ailment. It also observed that vomiting of blood could be due to various reasons and that the medical record did not pinpoint its cause or attribute it to any specific disease. Accordingly, by its order of March 20, 2020, delivered by Dr S M Kantikar for the Bench along with Dinesh Singh, the National Commission dismissed Bajaj Allianz Life Insurance’ revision and held it liable to settle the claim with double benefit for death. Terming the revision as misconceived, it directed Bajaj to pay further costs of Rs 2 lakh to Consumer Legal Aid.

The writer is a consumer activist