PROCEEDINGS BEFORE THE INSURANCE OMBUDSMAN, STATE OF KARNATAKA (UNDER RULE NO: 16/17 of THE INSURANCE OMBUDSMAN RULES, 2017) OMBUDSMAN –NEERJA SHAH In the Matter of MR. K.V. PRAKASH V/s BHARTI AXA LIFE INSURANCE COMPANY LIMITED Complaint No: BNG-L-008-1819 – 0346 & 0349 Award No: IO/BNG/A/LI/0119, 120/2019 -2020 1. Name & Address of the Complainant Mr. K.V. Prakash #3998/B, 2nd Cross, Near Ullala RTO, Vishwaneedam Post Bangalore -560091 (M):8235156864 / 8310504533 2. Policy No: 501-2845367 501-3712517 Type of Policy: Life Life Name of the Policy: Bharti Axa Life Secure Bharti Axa Elite Commencement of Policy/ Policy Income Plan Advantage Plan Period/PPT 16.02.2015 16.11.2015 Premium Amt 15 Years/05 Years 12 Years/12 years 54,000/- 46,000/- 3. Name of the Insured Mrs. K.P. Srilatha (Under both the policies) Name of the Policyholder 4. Name of the Respondent Insurer Bharti Axa Life Insurance Company Limited 5. Date of Repudiation/ Rejection 02.09.2016 6. Reason for repudiation/ Rejection Cancellation of policy beyond ‘Cooling Off Period’ not allowed 7. Date of receipt of Annexure VI-A 13.12.2018 8. Nature of complaint Issued new policy on a cheque which was issued towards renewal premium for old policy. 9. Amount of claim (1) ₹. 54,000/- (2) ₹. 46,000/- + Interest on both policies 10. Date of Partial Settlement N A 11. Amount of relief sought ₹. 1,00,000/- + Interest 12. Complaint registered under Rule No 13(1) (c) & (d) of Insurance Ombudsman Rules, 2017 13. Date of hearing/place 10/04/2019 - Bengaluru 14. Representation at the hearing a) For the Complainant Mr. Anchan – Son of the Complainant b) For the Respondent Insurer Mr. Kotresh –Area Sales Manager 15. Complaint how disposed Resolved 16. Date of Award/Order 02.07.2019 17. Brief Facts of the Case: The complaint emanated due to refusal of refund of premiums paid by the complainant while availing the said policies by the Respondent Insurer (RI). Though he represented his issues to the G.R.O. (Grievance Redressal Officer) of the RI, they stood by their earlier decision. Hence he has approached this Forum for redressal of his grievances. 18. Cause of Complaint: - a. Complainant’s argument: The Complainant in his complaint letter dated 04.12.2018 (copy of the Complaint addressed to RI) stated that he availed the 1st policy in the name of his wife bearing policy number 501-2845367 on Page 1 of 113 16.02.2015 by paying an amount of ₹. 54,000/-. Later on 04.11.2015, the Complainant received a telephonic call from the representatives of the RI, wherein they informed him that the next premium on the said policy was due in February 2016, and if he paid the said premium before 15.11.2015 he would be eligible for a discount of ₹.8,000/. Subsequently, when the sales representatives of the RI visited the Complainant in person, without consulting anybody, the Complainant issued a cheque for ₹.46,000/- and mentioned the said policy number on the back of the cheque and the same was debited in his bank account also. These representatives also obtained the signature of the Complainant on ECS/Direct Debit mandate form. All along he thought that he had issued the cheque for renewal premium for the said policy. Though he received a speed post during December 2015, he did not open the tappal, as he was very much confident that the cheque he had issued during Nov 2015 was for renewal premium for the first policy. When the RI contacted the Complainant for payment of renewal premium on the first policy, he was in for a rude shock and when he opened the tappal, he found that it contained a new policy. When he contacted the representatives of the RI, they remained incommunicado. Hence, he has approached this Forum seeking cancellation of one of the policies and adjust the premium thereon towards the renewal premium on the other policy. b. Respondent Insurer’s argument: The RI vide their SCN received on 28.03.2019 has admitted to the issue of both the policies after receipt of all the requirements in order. The RI issued the said policy as per the requirements of the Complainant and despatched the same to the Complainant with ‘Cooling Off’ cancellation clause and the policy holder has received the same. The Complainant never reverted back to the RI and invoke the ‘Free Look Cancellation’ provision, but instead raised the complaint for the first time on 24.08.2016 i.e. after 1 year from the date of issue of the said policy, that the RI issued the 2nd policy from the cheque issued by the Complainant towards the renewal premium of the first policy and hence wanted to cancel both the policies and seeking refund of the premium thereon. After evaluating the complaint, and verifying their records, the RI expressed their inability to cancel the said policies, as the Complaint approached them beyond ‘Cooling Off’ period, no mis-selling was involved and the Complainant did not raise any issues during the PIVC call, and accordingly the RI replied to the Complainant vide their letter dated 02.09.2016. Thereafter the Complainant approached the G.R.O. of the RI, wherein the GRO ‘Upheld’ the earlier decision of the RI. The RI further stated that they have put in place the PIVC (Pre-Issuance Verification Call), the core objective of this call being an exercise to confirm and satisfy at RI’s end, that the Complainant has understood the key features of the policy without any ambiguity and no grievance thereafter. The RI effected PIVC on the Complainants mobile number that was available as per their records and the Complainant did not raise any concern or issue and was in complete agreement with the terms and conditions of the policy. The RI further stated that the RI is neither aware nor privy to the communication the Complainant had with the persons who are alleged to have given false representation to the Complainant, as there is no material proof submitted by the Complainant. The RI never issues policies which are at variance with the one that is stipulated by IRDAI as issuance of any policy which is in variance with provisions of the Regulator attracts penal action. Further the RI fully complies with regulation of Sec 41 of Insurance Act 1938. Further, the RI time and again has cautioned general public against false assurance given by fraudulent intermediaries through various media. In spite of these alerts, if the Complainant chose to transact with such people it would be at his own risk. Further the Complainant has never alleged any kind of ‘forgery’ and admitted of receipt of both the policies in time and hence the RI has no role in the allegation of Complainants ‘Mis-Selling’. The RI has covered the risk for the duration for which the premium is paid and the policy has been issued as per the requirements of the Complainant, and he has approached the RI ‘Out of Free Look Page 2 of 113 Period’. The RI has conducted investigation and as there was not mis-selling activity involved, the Complainant is estopped from seeking cancellation of his policy. The allegations made by the Complainant is mere ruse to come out of the contract. For all the reasons mentioned therein, the RI has prayed the Forum for dismissal of the said complaint. 19. Reason for Registration of complaint: - The complaint falls within the scope of Insurance Ombudsman Rules, 2017 under Sec 13(1)(c)(d) and hence, it was registered. 20. The following documents were placed for perusal: - a. Complaint along with enclosures, b. Respondent Insurer’s SCN along with enclosures and c. Consent of the Complainant in Annexure VIA &and Respondent Insurer in VII A. 21. Result of personal hearing with both the parties (Observations & Conclusions): The issue to be decided by the Forum is whether this is a case of mis-sale of the said policies. During the personal hearing on 10.04.2019 the son of the Complainant informed the Forum that the sales representatives of the RI cheated his father and utilised the premiums paid by his father for issuing the new policies instead of adjusting the amount to old policies. Since this was a distant – tele marketing sale, the forum asked the representatives of the RI to play PIVC calls (both Pre & Post Sale). But the RI did not have call recordings. This is in violation of guidelines on Distance Marketing of Insurance Products issued by IRDA vide their circular ADMN/GDL/MISC/059/04/2011 dated 05.04.2011. From the records placed before the Forum, it is observed that the Complainant availed the first policy in the name of his wife bearing policy number 501-2845367 on 16.02.2015 by paying annual premium of ₹.54,000/- . The next premium was due on 16.03.2016. As per the Complainant version, he received a telephone call on 04.11.2015, that if the Complainant paid the premium due in Feb 2016 on the old policy, now ( i.e. during Nov 2015) the Complainant would be eligible for discount of ₹. 8000/- on the premium paid. The Forum notes the Complainant should have been vigilant enough at the time of issuing the cheque. Without verifying the antecedents of the caller, the Complainant issued the cheque for an amount of ₹. 46,000/-. The RI, instead of adjusting the amount for the renewal premium due, on the old policy, issued a new policy.