United India Pay Claim Amount With Compensation

October 17, 2007

Ref : ER/press/2007/smruti.27

The Consumer Disputes Redressal Forum, Ahmedabad District (Rural), deciding on a case filed by Consumer Education and Research Society (CERS) and Smruti Bhasker Patel, Ahmedabad, accused United India Insurance Company Limited of gross negligence, deficiency in service and unfair trade practice.

The Forum ordered the insurance company to pay Smruti $ 5041.65, i.e. $ 3632.15 plus $ 1409.50 with 9 per cent cumulative interest from the date of the complaint until recovery. The amount should be paid in Indian rupees as per the exchange rate prevailing on the date of the complaint. The Forum also ordered the company to pay her Rs. 10,000 for tension, hardship and inconvenience suffered by her.

Smruti had paid a premium of Rs. 3281 and taken out an overseas mediclaim policy from United India Insurance on 22 April 2002, covering the period from 27 April to 12 June 2002. She renewed the policy from 12 June to 25 June, and again up to 10 July 2002, for which she paid the premiums. The policy thus covered her from 27 April to 10 July 2002.

During her stay in the USA, Smruti suffered from acidity-related laryngeal lesion illness and was treated at the John Hopkins Hospital on 1 and 2 July 2002 as an outpatient and on the second day underwent a surgery. She paid US $ 3632.15 towards the charges for surgery and subsequent hospitalisation up to 9 July 2002.

Smruti submitted her claim form with the original documents to Mercury International Assistance and Claims Ltd., the UK-based agent of United India Insurance. She also sent $ 100 along with the claim form towards the amount deductible as per the policy. Later, Smruti received three more bills from John Hopkins Hospital and forwarded them to Mercury International for direct payment.

Mercury International returned her some of the documents along with an undated letter and asked for some other documents. As Smruti had already sent the originals, she sent on 23 August 2002 copies of the documents asked for. After more futile correspondence between and among Smruti, United India Insurance and Mercury International, she sought the intervention of CERS, which in turn wrote to the chairman of United India Insurance requesting an early settlement of the claim.

Eventually CERS and Smruti filed a complaint before the Forum on 30 May 2003. The Forum, however, did not admit the claim on the grounds that the insurance company had not repudiated the claim.

In the face of the indifference of both the insurance company and its agent, a notice was served on the insurer on 1 April 2004 giving it 10 days to settle the claim. The notice was ignored.

Smruti and CERS filed a fresh complaint with the Forum on an affidavit against United India Insurance, naming its local and regional offices at Ahmedabad as well as its registered head office at Chennai, and prayed for grant of compensation.

Smruti and CERS submitted that, even after two years, the insurance company had shown clear negligence and that it had neither settled nor repudiated the claim within 30 days of receipt of the claim, as per the IRDA Regulation 8(3) 2002. But the fact that the insurance company had asked Mercury International to arrange for releasing the payment soon indicated that it had acknowledged the claim but was not settling it.

The insurance company argued, among other things, that it had not repudiated the claim, that the complaint was not maintainable as the Forum had earlier dismissed it, and that the complainants had not challenged that order.

Concluding that Smruti "has proved her case", the Forum clarified that earlier, it had considered her complaint as an "early complaint" because her claim had not been repudiated and hence the dismissal. It had not dismissed it on merits as it had not heard the parties involved at length. But now five years has passed and the insurer has neither repudiated her claim nor settled it. "This shows gross negligence amounting to deficiency in service and unfair trade practice," the Forum observed.

The Forum ordered United India Insurance to pay Smruti $ 5041.65 with 9 per cent cumulative interest from the date of the complaint until recovery. The amount should be paid in Indian rupees as per the exchange rate prevailing on the date of the complaint. The Forum also ordered the insurance company to pay Smruti Rs. 10,000 for tension, hardship and inconvenience suffered by her.

The Forum comprised Mr. P. U. Rana, president, and Mrs. Nandiniben K. Thaker and Mrs. Jyotiben P. Jani, both members. Mr. A. M. Chauhan, advocate, appeared for Smruti and CERS, and Mr. M. J. Parikh for United India Insurance.

Date : 06/10/2007 Pritee ShahPlace : Ahmedabad Editor INSIGHT The Consumer Magazine

-----------------------Opinions, test results and research findings issued through this Press Release cannot be used in any form directly or indirectly for advertising, promotional or commercial purpose.CONSUMER EDUCATION AND RESEARCH SOCIETY"Suraksha Sankool", Thaltej, Sarkhej-Gandhinagar Highway, Ahmedabad 380 054 (INDIA)Phone: 079-27489945-46, 30121001-2-3 Fax: 079-27489947 Email: cerc-----------------------