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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUREPALLI NANDA, J.
DHFL Pramerica Life Insurance Company Ltd. – Appellant
Versus
The Union of India & others - Respondents
W.P.No.47102 OF 2018
Decided on : 03-06-2024
Insurance - Life Insurance - Insurance Ombudsman Rules - The court discussed the Insurance Ombudsman Rules, particularly Rule 6(4) and Rule 6(5), emphasizing the insurer's duty to explain policy terms and the necessity of obtaining informed consent, which influenced the decision to uphold the Ombudsman's award.
Fact of the Case:
The petitioner, an insurance company, challenged an award from the Insurance Ombudsman directing it to settle a death claim after rejecting it due to alleged non-disclosure of medical history by the insured.
Finding of the Court:
The court found that the Ombudsman had justified the award, noting that the insured did not have fraudulent intent in not disclosing medical history and that the insurer failed to prove its case adequately.
Issues: Whether the Insurance Ombudsman acted within jurisdiction and whether the rejection of the death claim was justified based on alleged non-disclosure of medical history.
Ratio Decidendi: The court held that the insurer's failure to provide a reasonable opportunity to present its case and the lack of fraudulent intent by the insured were critical in upholding the Ombudsman's decision.
Result: The writ petition was dismissed, and the interim order was vacated.
ORDER :
SUREPALLI NANDA, J.
Heard Sri Salloori Ramesh, the learned counsel appearing on behalf of the Petitioner, Learned Deputy Solicitor General of India, appearing on behalf of respondent No.1 and Sri B.Shanker, the learned counsel appearing on behalf of Respondent No.3
2. The petitioner approached the Court seeking prayer as under:
(a) calling for the records relating to the Impugned Award bearing No.IO/HYD/A/LI/0110/2018-19 in Complaint Reference No.HYD-L-013-1718-0474, dated 4.10.2018 passed by the Respondent No. 2, viz., The Insurance Ombudsman for the States of AP, Telangana and Yanam, # 6-2-46, First Floor, Moin Court, A.C.Guards, Lakdi-ka-Pool, Hyderabad-500004, wherein, the petitioner has been directed to settle the claim; and
(b) quash the same by holding without any jurisdiction and pass such other order or orders.....”
3. PERUSED THE RECORD :
6) That as on the date of Insurance, the age of the deceased was about 54 years. This itself is clear that, the Insurance Company shall take utmost care and caution, while insuring the person of above 30 years. It is the duty of the Insurance Company to go for the Medical Checkup of the person who seeks the Insurance by itself and proceed to Insure, based upon the Medical Report. That the said medical checkup by the Petitioner has not taken place.
7) The Insurance Policy is not processed through any qualified Agent of Insurance Company, the policy is processed through Branch Manager Sri. Raju Gollapally of M/s. Dewan Housing Finance Corporation Ltd., It is pertinent to note that the onetime premium policy has been obtained by the M/s. Dewan Housing Finance Corporation Ltd., and the premium has been paid by the M/s. Dewan Housing Finance Corporation Ltd.,
8) That as per regulations of 2017 Rule 6 (4) which is as follows: "Where for any reason, the proposal and other connected papers are not filled in by the prospect, the insurer or the distribution channel shall explain the contents of the form, and a certificate shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract.” That in regard to the deceased Policy, the deceased is illiterate and the deceased put his signature in Telugu i.e., in vernacular language as such the deceased has not filled the prospects/application and in the said application there is no certificate "That the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract."
9) That as per Regulation 2017 Rule 6 (5) which is follows: "The Insurers shall ensure, that a sale executed over distance-marketing modes such as Internet, SMS, Tele marketing, interactive electronic medium etc., shall be undertaken by authorized and qualified sales persons who are specified in this behalf by the Authority. It is mandatory that the consent of the prospect be obtained before canvassing. Care should be exercised to ensure that the prospect contacted has clarity as to identity of the insurer, the distribution channel, the product, benefits and conditions of offer etc. The canvassing so made shall not involve compulsion, inconvenience or nuisance of any kind to the prospect." It is submitted that the Petitioner and Dewan Housing Finance Company Ltd., are sister concerns and a specific Policy by name DHFL Pramerica Group Credit Life + is created between the Petitioner and M/s. Dewan Housing Finance Corporation Ltd., and those who take the finance from M/s.Dewan Housing Finance Corporation Ltd., must compulsorily take the Life Insurance from Petitioner to an extent of loans sanctioned. Hence the Policy is violat
The court affirmed that insurers must ensure clear communication and understanding of policy terms, especially for illiterate clients, to avoid unjust repudiation of claims.
The judgment established the importance of materiality, fraudulent intent, and knowledge of the policy-holder in cases of misstatement or suppression of facts in relation to insurance claims.
The insured's obligation to disclose health status is limited to knowledge of such conditions, and unsubstantiated claims of suppression cannot invalidate a life insurance policy.
Insurers must comply with statutory obligations of disclosure; failure to do so prevents repudiation of claims based on misrepresentations in policy applications.
The materiality of a fact is determined by the circumstances of each case and is a question of fact. A fact to be material has to have a direct bearing on the cause of death, and mere proximity to th....
1) Per Sec. 45 of Insurance Act, claim can be repudiated, if it is proved that the assured knowingly and fraudulently suppressed the material facts.2) Contractual duty so imposed on the Insured is su....
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