A consumer court, while directing an insurer to pay Rs. 24 lakh to a Delhi resident, criticised its rejecting of a rightful claim of an insured and becoming “unjustly rich”. The Delhi State Consumer Disputes Redressal Commission lambasted the Life Insurance Corporation of India (LIC), saying, “We have deprecated this practice of the insurance companies from taking a flimsy clue or remote reference from the discharge summary or statement with a view to reject the rightful claim of the insured.  It appears that this is how the respondent has become one of the richest organisations in India.”

Complainant Yogesh Baisiwala’s wife was insured with LIC for Rs. 20 lakh. In November 2006, while she was hospitalised for removal of her uterus, she developed a “hospital-acquired infection” and died. 

Baisiwala’s claim for the policy was rejected by the insurance company as his wife had undergone an angiography test eight years before taking the insurance policy and the same was concealed while taking the policy.

Appearing for Baisiwala, advocate Anurag Mangla argued there was no concealment the insured not have a prior history of heart disease and the cause of her death was not because of heart disease.

A bench of Salma Noor and VK Gupta directed LIC to pay Rs. 20 lakh as the policy amount and Rs. 4 lakh as compensation for mental agony and harassment to Baisiwala, saying: “Their agents run after the consumers for selling their policies and when their turn comes to indemnify the loss, they not only invent such excuses but also start indulging in most unscrupulous and abominable manner.  They little realise that they survive and thrive on the consumer and propensity to become unjustly rich by rejecting the claims of the consumer with a sledge of hammer is highly depreciable.”

LIC had contended that Baisiwala was not entitled to claim the insurance amount as the insured obtained the policy by making deliberate mis-statement and withheld material information regarding her death.