Consumer Commission Orders SBI General Insurance to Pay After Denying Claim Without Issuing Policy
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The District Consumer Disputes Redressal Commission in Ernakulam recently ruled against SBI General Insurance Company Ltd. for failing to provide an insurance policy after accepting the premium payment and then rejecting the insurance claim because the policy was never issued. The case was heard by the panel led by President Shri D.B. Binu, along with members Shri V. Ramachandran and Smt. Sreevidhia T.N.
Background of the Case
The complainant is an account holder of State Bank of India (SBI), which introduced him to a health insurance policy from SBI General Insurance. On December 3, 2022, he submitted the insurance application through SBI’s representative and paid the premium of Rs. 10,502 on December 14, 2022, for a policy covering Rs. 3,00,000. However, despite several follow-ups, the complainant never received the policy document or identity card due to a claimed technical error.
The Incident and Claim Rejection
On May 7, 2023, the complainant had an accident causing severe back pain and weakness in his legs. He was admitted to Aster Medicity hospital on May 22, 2023, where he was diagnosed with a serious condition called Right Cingulate Glioma. He underwent major brain surgery on May 25, 2023, and incurred medical expenses totaling Rs. 4,65,485.
When the complainant submitted a cashless claim to SBI General Insurance, it was denied. The insurer said the policy was never issued because of a plan change, and they refunded the premium on May 26, 2023. This left the complainant without insurance coverage despite paying the premium.
Legal Action and Claims
Feeling wronged, the complainant approached the Consumer Commission. He accused the insurance company and SBI of poor service and unfair business practices. He demanded the full insured amount of Rs. 3,00,000 with 12% interest from the date of the claim, Rs. 50,000 as compensation for the trouble, and reimbursement for the legal costs.
Responses from SBI and the Insurance Company
SBI said the complaint should not be filed against them because the dispute was only between the complainant and SBI General Insurance. They explained that they only helped transfer the premium payment and were not responsible for issuing the policy.
SBI General Insurance did not respond to the notice within the required time. Due to their failure to file a reply, the Commission considered their silence as acceptance of the charges against them.
Commission’s Verdict
The Consumer Commission ruled that SBI General Insurance’s refusal to issue the policy after accepting the premium and then denying the claim was a clear failure in service and an unfair business practice. This violated Sections 2(11) and 2(47) of the Consumer Protection Act, 2019.
However, the Commission also stated that SBI was only a payment facilitator and not responsible for the insurance policy or the claim.
Compensation Ordered
The Commission ordered SBI General Insurance to pay Rs. 3,00,000 to the complainant as the insured amount. Additionally, they were directed to pay Rs. 10,000 as compensation for mental agony and Rs. 5,000 to cover legal expenses.
