Insurance firm indicted for unfair trade practices….Jehangir B Gai
Subject: Bajaj Allianz insurance indicted for unfair trade practices Backdrop: Companies often lure consumers with attractive schemes,but later try to renege on their commitment.In a significant ruling,the Central Mumbai District Forum bench,comprising president Nalin Majithia and Bhavana Pisal,came down heavily on Bajaj Allianz and directed the insurance company to pay penal and deterrent compensation,which is rarely,if ever,done.Case study: Onkar Prasad Dixit,a senior official of Sahara Commercial Corporation,had taken a policy known as Bajaj Allianz Swarna Vishranti Pension Plan from Bajaj Allianz General Insurance.The policy was taken on July 19,2004 with a sum insured of Rs 26 lakh,plus bonus.Although a yearly premium of Rs 6,17,929 was payable,the insurance company offered a rebate of Rs 18,870,thereby reducing the premium to Rs 5,99,099.This amount had to be paid every year for a period of five years.Thereafter,the insurance company would pay a monthly pension of Rs 22,944 during the lifetime of the insured,and on his demise,the amount would be paid to his wife.However,the detailed terms and conditions of the policy were not furnished to Dixit.
Right from 2004 till August 2009,Dixit kept paying the annual premium.Even though the premium for five years would total Rs 29,95,295,the insurance company collected Rs 30,20,128,overcharging Rs 24,832.Yet,when Dixit asked the insurance company to release the benefits,available under the policy,evasive excuses were given to avoid payment.
After persistent follow-up,Bajaj Allianz informed Dixit that the company had made a mistake in stating the benefits under the policy.The insurance company also claimed that its Swarna Vishranti Pension Plan policies had been withdrawn after obtaining permission from the Insurance Regulatory Development Authority (IRDA) and hence Dixits policy automatically stood cancelled.However,the company offered to refund Rs 29,35,599.
Dixit then took the LIC Jeevan Akshay VII policy,and asked Bajaj Allianz to transfer the premium paid by him to LIC.Even though this was done,there was a difference in the benefits available under the LICs policy,which had a lower annuity amount,resulting in a loss of Rs 5,78,360 to Dixit.In November 2009,Dixit filed a complaint before the Central Mumbai District Forum.
The insurance company defended itself by stating the complaint was misconceived because the policy had been withdrawn after taking IRDAs permission and the premium received had been transferred to the LIC on Dixits request for another policy.In his order dated January 29,Nalin Majithia,president of the forum,observed that the insurance company had failed to produce any proof or documents to show that the IRDA had granted permission for the withdrawal of the policy.It noted that the insurance company had misled the consumers by offering an attractive policy,but refusing to honour its commitment,after collecting nearly Rs 30 lakh as premium.The forum indicted Bajaj Allianz of having indulged in unfair trade practice and held that there was deficiency in service.The forum observed that it was necessary to award heavy compensation as a deterrent so that such unfair trade practices would not be repeated in the future.
Accordingly the forum directed the insurance company to pay a penal compensation of Rs 4 lakh to Dixit.The forum also directed Bajaj Allianz to refund the excess premium of Rs 24,832 overcharged by it.It also directed Bajaj Allianz to pay Rs 5,78,360 to compensate Dixit for the loss caused by the difference in the annuity amounts between the policy issued by Bajaj Allianz and that issued by LIC.An interest of 9% per annum on these amounts was also granted and costs of Rs 10,000 were awarded.
Impact: It is hoped that the new trend of awarding penal or deterrent compensation will gain momentum.This is the only way to improve the system.Otherwise,service providers will continue to dupe the vast majority of consumers.
(The author is a consumer activist and has won the Government of Indias National Youth Award for Consumer Protection.His email is jehangir _gai@indiatimes.com)