Revision as of 07:36, 20 January 2016

Fee for assigning policies

HC quashes LIC fee for assigning policies

Shibu Thomas | TNN

From the archives of The Times of India 2007, 2009

Mumbai: In a relief for thousands of persons who pledge their insurance policies to raise loans, the Bombay High Court quashed a three-year-old rule by the country’s biggest insurance provider, Life Insurance Corporation, to charge a fee for assigning insurance policies to financial companies.

‘‘The service charge/fee is not authorised by law,’’ said a division bench of Justice F I Rebello and Justice J H Bhatia, while ruling that LIC’s demand for a fee violated the fundamental right of financial companies who advance loans on insurance policies to carry on trade and business. The circular levying a fee of Rs 250 if a policy holder assigns his insurance policy in favour of ‘‘financial organisations’’ also infringed on the Constitutional right of petitioner Dravya Finance Pvt Ltd’s by depriving it of its property without the authority of law, the high court held.

With 19 crore policy holders, LIC is the market leader with a 55 % share of the insurance industry. As per rules, a policy holder can transfer his interest in the life insurance policy to another person or institution as a security for a house loan or just emergency cash. These institutions reap ‘‘windfall gains’’ in the form of taxexempted returns, according to LIC.

Trading in life insurance policies, where a company purchases insurance policies from policy holders and then sells it to banks and financial institutions, is a lucrative business worldwide.

Earlier in 2003, LIC tried to rein in the practice by banning trading in insurance policies. The high court in 2007, however, set aside the rule and held that insurance policies are ‘‘movable property’’ that can be traded and assigned freely.

Insurance co. liable for deficiency in service

From the archives of The Times of India 2010

‘Insurance co liable for deficiency in service’

Shibu Thomas | TNN

Mumbai: In the midst of intense war between hospitals and medical insurance companies over health insurance reimbursements, there is some good news for patients. Central Mumbai District Consumer Disputes Redressal Forum, in a landmark order, has held that an insurance company is liable for deficiency in service if it fails to reimburse hospitalisation costs of a patient who has a Mediclaim policy with it.

The forum ordered Oriental Insurance Company and Raksha TPA to pay Rs 64,223 to an Andheri-based couple Ketan (47) and Bhakti Desai (40); the amount was deducted by the insurer from the hospitalisation reimbursement on the ground that ‘‘it was too high’’.

The bench comprising president S P Mahajan and members, J S Iyer and S S Patil, also asked the insurance firm to shell out Rs 10,000 to the couple as damages for causing mental agony and legal costs.

The insurance company paid up the amount earlier this month following execution proceedings initiated by the couple.

‘‘The company’s attitude was outrageous,’’ Ketan told TOI. ‘‘I had a Mediclaim policy with the company for over 10 years and was very regular in renewing the policy annually and paying the premiums. I only claimed the amount that was applicable and so it was a shock when the firm deducted the amount. Once the insurance company approves the hospital bill, how can it say it won’t pay?’’ he asked.

The Desais had a joint mediclaim policy with Oriental for Rs 5 lakh. Bhakti underwent a surgery for ‘‘gall bladder calculus with pancreatitis’’ at Lilavati Hospital in December 2007.

Following her discharge, they submitted the hospital’s bill of Rs 3.94 lakh to the insurance company for reimbursement. Oriental, however, paid them only Rs 3.29 lakh. It said it had deducted Rs 64,223 on the ground that the fees charged by the surgeon, the anaesthetist and the operation theatre bill were too high.

The insurance company also deducted Rs 293 charged for cologne, blade and a warm blanket.

Automobile insurance

Overloading no reason to deny claim: SC

The Times of India Jan 10 2016

AmitAnand Choudhary

Overloading of a vehicle cannot be the sole ground for an insurance company to reject claims for damages caused to the vehicle in a road accident, the Supreme Court has ruled while quashing National Consumer Disputes Redressal Commission's order that loss caused to overloaded vehicle won't be compensated.

A bench of Chief Justice T S Thakur and justice V Gopala Gowda held that carrying more passengers than the permitted capacity in an insured vehicle does not amount to a fundamental breach of the terms and conditions of the policy.

It said the insurance com pany had to prove that the accident was caused because of the overloading to escape the liability of paying claims.The bench directed the insurance company to reimburse claim to the damages caused to a goods-carrying vehicle travelling with five passengers while its seating capacity was only two, including the driver.

The bench said the insur ance company could deny claims only in cases where breach of insurance policy was so fundamental in nature that it brought the contract to an end. “The insurance company , in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the ownerinsured of the vehicle for which the burden of proof would rest with the insurance company ,“ it said.

The bench quashed the order passed by NCDRC and Haryana State Consumer Disputes Redressal Commission which had allowed plea of insurance company that overloading could be a ground for denying claim for the damages.