 "Tata AIA Insurance asked to refund Rs 2.47L: Case overview & precautions")
The National Consumer Disputes Redressal Commission (NCDRC) has ordered Tata AIA Life Insurance Co. Ltd to refund Rs 2.47 lakh, along with 9 per cent annual interest, for mis-selling of insurance policies.
What is this case?
In 2009, the complainants were misled by a TATA AIA agent into purchasing five insurance policies with a one-time premium of Rs 49,900 each, totalling Rs 247,700. They were promised returns in 1–1.5 years, but later after obtaining the policy documents, discovered the premium had to be paid for 10 years. Complainant No. 1, a retiree, was unable to afford this and sought resolution, but the insurer dismissed his grievances, citing a lapse of the free-look period.
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The complainants filed a case before the District Consumer Commission, Lucknow, alleging deficiency in service and unfair trade practices, seeking a refund with interest and compensation. The opposite party i.e., TATA AIA did not defend the complaint, and on December 10, 2014, the Commission ruled in favour of the complainants, awarding a refund with 9 per cent annual interest.
On appeal, the State Consumer Commission, Uttar Pradesh, upheld the decision on June 14, 2017, finding no merit in the insurer's defense of advocate’s negligence and confirming unfair trade practices.
The insurer's revision petition before the National Consumer Disputes Redressal Commission, claiming the complaint was time-barred, was dismissed on November 7, 2024. The Commission held the case was within the limitation period due to a cheque issued in July 2012, sustaining the District Commission’s order with minor modifications to the compensation.
Saumya Brajmohan, Partner at Solomon & Co. explains how to deal with such a case?
In the event that a purchaser has to file a case against an insurer for deficiency of services, unfair trade practices, etc., it is advisable to present the complete claim in the first instance, along with all the relevant documents such as the main insurance contract, proof of payment of premiums, repudiations/rejections from the insurer, any communication between the parties, etc. A purchaser/complainant can also present their case in person before the consumer commissions.
The claims of deficiency in services and unfair trade practices have to satisfy the meaning ascribed to it under the Consumer Protection Act, 2019. To this effect, there are a lot of case laws of various Courts/Commissions in India, which can be used to strengthen the case of the purchaser.
The purchaser/complainant can seek various reliefs such as a refund of the amount paid, compensation towards damages, costs for litigation, interest on the claim amount etc. The grant of the reliefs is discretionary upon the Commission, and based on the case made out by the parties, the commission may/not grant the reliefs to the extent sought.
What are the precautions to be taken?
At the time of purchasing an insurance policy, the purchaser has to exercise due diligence.
The purchaser should read all the policy-related documents carefully and only then invest in the policy.
Once the policy is purchased, the purchaser must insist on receiving all the documents pertaining to the policy at the earliest.
While dealing with an agent of an insurer, it is prudent to ask questions on the terms and conditions of a policy to try and understand the complete details of the policy, as sometimes there are hidden terms or fees which are only discovered later.
In certain cases, despite taking all the necessary precautions, a purchaser may be enticed/cheated into purchasing a policy. In such a case, if the insurer does not provide a remedy, the purchaser should approach the Consumer Commission for damages.
The Irdai has set up an Insurance Ombudsman, who acts as an external authority to adjudicate disputes between insurer and purchaser. The purchaser can also opt to pursue its claims before the Ombudsman, failing which, the purchaser can approach the Consumer Commission.