LIC fined Rs1 lakh for denying claim arbitrarily

The New Delhi District Consumer Disputes Redressal Forum observed that LIC had “misdirected itself” by not showing any evidence that the deceased was suffering from asthma prior to availing the policy and had not “applied its mind” while denying his claim

Life Insurance Corporation of India (LIC) has been directed by a Delhi based consumer forum to pay Rs1 lakh to the husband of a policyholder for ‘arbitrarily’ rejecting his claim for the assured amount on his wife’s death.

The New Delhi District Consumer Disputes Redressal Forum observed that LIC had “misdirected itself” by not showing any evidence that the deceased was suffering from asthma prior to availing the policy and had not “applied its mind” while denying his claim. LIC had denied the claim saying the woman was an asthma patient and had not disclosed her illness while taking the policy.

It had relied on a discharge summary of 2004 to reject the claim.

“We have considered the material on record and submission made. It is patent that the opposite party (LIC) has misdirected itself. It has not brought any evidence of deceased suffering from asthma before taking of policy in 2003 or any record of taking treatment.

“The discharge summary of 2004 is of no use. It shows trouble for 4-5 days in 2004 and not before taking policy in 2003. Opposite party has not applied its mind. We hold it guilty of deficiency in service by arbitrarily repudiating the claim,” a bench presided by CK Chaturvedi said.

It directed LIC to pay the sum insured of Rs50,000 along with “punitive damages” of Rs50,000 to Delhi resident Dev Raj whose wife had died in December 2005. The forum also directed LIC to obtain half of the damages from salary of the officer concerned “who gave no attention to the appeal and agreed for repudiating the claim”.

Raj, in his complaint, had said that his wife had obtained the policy for Rs50,000 from LIC in 2003 and under it she was covered till 2005, but the insurance firm had rejected his claim on the ground that she was an asthma patient.