IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION AT NEW DELHI NC/CC/84/2009 With NC/IA/6052/2016, 5348/2020 & 3048/2023 (Placing addl. Documents)

The State Insurance and PF Department (SIPF) … Complainant Govt. of Rajasthan „D‟ Block, II Floor Vitta Bhawan, Janpath, Jaipur Versus New India Assurance Co. … Opp. Party New India Assurance Building

87, M.G.Road, Fort, Mumbai-400 001 BEFORE:

HON’BLE MR. JUSTICE A.P. SAHI, PRESIDENT HON’BLE MR. BHARATKUMAR PANDYA, MEMBER Appeared at the time of arguments:

For the Complainant : Mr. Bharat Sood, Advocate For the Opp. Party : Ms. Awantika Manohar, Advocate Mr. Aman Kumar Pandey, Advocate Pronounced on: _13^th August 2025

ORDER

JUSTICE A.P. SAHI, PRESIDENT

1. A State owned Aircraft of the Govt. of Rajasthan that was insured by the Complainant, met with an accident on 24.05.2007, the reinsurance claim whereof has been repudiated by the Opposite Party on 03.02.2009 giving rise to this Complaint alleging deficiency and unfairness against the Insurance Co.

2. This is a unique case where the State Insurance and Provident Fund Department (SIPF) of the Government of Rajasthan, functioning as an IRDA licensee, insured a King Air B-200 (VT-RJA) Aircraft that was acquired by the State of Rajasthan for facilitating the transport of VIPs, State Guests and their security of the State of Rajasthan. The policy acquired on 02.03.2007 assured a sum of Rs. 36.90 Crores and the period of coverage for the risks relating to the said aircraft was from 02.03.2007 to 01.03.2008. The risk coverage included the Hull risk of Rs. 24 Crores, Third party liability to the extent of Rs. 12 Crores and Passenger liability for Rs. 90 lakhs. The policy records the name of the insured as Chief Pilot Officer with its address endorsed as State VIP Aircraft, Sanganer Airport, Jaipur. The premium paid for the said insured sum was Rs. 25,50,000/-.

3. The Complainant insurer states that it was desirous of protecting itself from any liability arising out of the risk coverage and therefore proposed a reinsurance whereby through this method, it sought the coverage of its liability arising out of any peril covered under the original insurance policy.

4. It may be pointed out that a reinsurance differs from a double insurance in the sense that in a double insurance the insured acquires two insurances on the same risk and with the same interest, whereas in a reinsurance, the coverage is to the liability under the first insurance. On a reinsurance, the new reinsurer is answerable to the Insurance Company, and not to the original insured. This arrangement is therefore exclusively for the insurer, like the Complainant in the present case, to cover and indemnify itself against any liability which the Insurance Company may incur under the original insurance cover. The original coverage is thus shared by another insurer via this method. We may refer to the meaning of the word reinsurance as defined in Ivamy’s Dictionary of Insurance which defines reinsurance as follows:

Reinsurance. A type of insurance the purpose of which is to indemnify the insurers taking the place of the original insured against the loss which they may themselves sustain in their capacity as insurers under the original policy. Reinsurance is of two kinds: (a) facultative reinsurance i.e. reinsurance against the liability on a particular policy; and (ii) treaty reinsurance i.e. reinsurance against liabilities on policies generally.

5. It may be further pointed out that insurance contracts can be negotiated through insurance brokers, who procure insurance covers negotiating between the insurer and the insured as an auxiliary service. The soliciting of such services through procurement ensures remuneration or reward which is known as the insurance commission earned by an insurance broker.

6. As noted above, the aircraft was already insured with the Complainant who sought the services of a broker, according to the Complainant, for a reinsurance, and for that purpose the Complaina