The Mysore District Commission finds Kotak Mahindra Insurance Co. responsible for violating policy terms

The District Consumer Disputes Redressal Commission in Mysore, Karnataka, consisting of Smt. A.K. Naveen Kumari (President), Smt. M.K. Lalitha (Member), and Sri. Maruthi Vaddar (Member), held Kotak Mahindra Life Insurance Co. accountable for failing to adhere to policy terms. These terms included a provision for a 20% premium refund upon withdrawal after three years of policy issuance.

Summary of Facts

The complainant purchased a 20-year policy from Kotak Mahindra Life Insurance Co. Ltd. with a premium payment term of 10 years, amounting to an annual premium of Rs. 51,126. After making five annual payments totaling Rs. 2,55,630, the complainant faced unforeseen circumstances that prevented further payments. Seeking a refund, the complainant alleged that despite numerous attempts to resolve the matter with the insurance company, no satisfactory response was provided. Frustrated, the complainant filed a consumer complaint against the insurance company in the District Consumer Disputes Redressal Commission, Mysore, Karnataka.

The insurance company responded by disputing the complainant’s request for a refund and additional compensation of Rs. 1,00,000, asserting that such demands were unjustified and contrary to the policy’s stipulations. It argued that according to the policy’s terms, the complainant was entitled only to a surrender value after completing three years of premium payments. The company denied any lapse in service, stating that the complainant was aware of and had accepted the policy’s conditions. Additionally, it argued that the complainant was precluded from challenging the policy terms after making premium payments for over three years.

Findings of the District Commission

The District Commission observed that while the complainant did not present the policy document itself, the insurance company submitted a copy for review. It highlighted that according to the policy, the insured had the opportunity to cancel within 15 days of receiving it. Since the complainant did not exercise this option, the policy terms specified that surrender and refund were only applicable after completing the full 20-year term. The Commission also noted that the policy deposit receipts confirmed the complainant’s payment of five annual premiums amounting to Rs. 2,55,630.

Despite the policy’s 20-year duration and a requirement for 10 years of premium payments, the District Commission observed that the complainant had only paid premiums for 5 years. Nevertheless, the Commission emphasized that as per the policy’s terms and conditions, the insurance company was obligated to refund a minimum of 20% of the assured sum under such circumstances. It concluded that the insurance company did not meet this obligation, leading the District Commission to hold it accountable for service deficiencies.

Considering the assured sum of Rs. 6,25,962/- and the fact that the complainant made payments of Rs. 51,126/- annually for 5 years, the District Commission ordered the insurance company to reimburse Rs. 1,25,192.40/- to the complainant, equivalent to 20% of the assured sum. Furthermore, the insurance company was instructed to provide Rs. 25,000/- as compensation for mental distress and service deficiency, in addition to covering litigation expenses of Rs. 10,000/- for the complainant.

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