Case study

(1)
Life Insurance Corporation of India v/s Mrs. Sunanda
KanthaleA c c o r d i n g t o c o m p l a i n a n t S u n a n d a K a n t h a l e , h e r h u s b a
n d Manoharrao Kanthale who worked as a stores superintendent with
theA m r a v a t i b r a n c h o f M a h a r a s h t r a S t a t e C o r p o r a t i o n , p u r c h a s e d a
n insurance policy for Rs 20,000 on November 28, 1992. The policy whichwas a non-medical
one, was scheduled to mature on November 24, 2004,she said. Unfortunately Manoharrao
passed away on October 22, 1993,10 months and 25 days from the date of purchasing the
instrument.Being the nominee in the policy, she asked for her claim for an amount of Rs 40,000
(under double benefit provision in accident cases) and made anapplication to the Akola
Branch Manager of LIC. The senior manager
of L I C ( A m r a v a t i D i v i s i o n ) h o w e v e r r e f u s e d
t o s e t t l e t h e c l a i m v i d e h i s l e t t e r d a t e d Au g u s t 4 , 1 9 9 4 . As t h e p o l i c y w a s a
n o n - m e d i c a l o n e , t h e reason given by the official for not settling the claim was
also a
boguso n e , s h e a l l e g e d . S u n a n d a t h e n w r o t e t o t h e a r e a m a n a g e
r o f L I C , Mumbai, justifying her claim. The Mumbai office too (vide letter
datedApril 20, 1995) refused to settle the claim, Kanthale added.She then
lodged a complaint with Akola District Consumers Grievancesredressal forum.
In the complaint, she appealed to the forum to issue the
necessary directives to the LIC for paying Rs 40,000 along with 18 per cent interest,
a compensation of Rs 50,000 towards mental tension causedand Rs 1,000 towards legal
expenses.D e f e n d i n g t h e s t a n d t a k e n b y t h e c o m p a n y , t h e L I C r e f u t e d
a l l t h e allegations made by Sunanda. Manoharrao, who held the policy, had keptthe
information about his health a secret while purchasing the instrument,the company alleged.The
forum referred to columns 14 and 26 in the application form where the policy purchaser
had made statements about his health. The form wasduly singed by Dr B R Jain, the forum
said. The LIC officials produced proofs before the forum regarding heart disorder of the
policy holder andsick leave availed by him after taking the policy. However, they could
not prove that Manohar was not well on the day of purchasing the policy.The District Consumers
Grievances Redressal Forum has directed Senior Divisional Manager of Life Insurance
Corporation (LIC), Amravati, AreaM a n a g e r , M u m b a i , a n d B r a n c h M a n a g e r , Ak o l a ,
t o p a y R s 2 0 , 0 0 0 t o Sunanda Kanthale towards insurance claim besides interest on the
amountfrom October 22, 1993, till the date of payment at a rate of 12 per cent. The
forum has also directed LIC to pay compensation of Rs 10,000 to thewoman for causing
mental tension to her during the four years, after her husband's death, in releasing the
insurance amount.I f t h e i n s u r a n c e c o m p a n y f a i l e d t o p a y t h e c o m p e n s a t i o n
w i t h i n t w o months from the date of receipt of copy of the judgment, the
companyw i l l b e l i a b l e t o p a y i n t e r e s t a t a r a t e o f 1 8 p e r c e n t o n t h e a m o u n t
tillfinal payment besides legal expenses of Rs 250, the forum ruled.
T h e forum also ruled that though the compensation amount, demanded by thecomplainant,
appeared exaggerated, considering the troubles she had toface in the last four years
for settlement of claim, the company should pay her Rs 10,000 towards compensation.
(2)

Life Insurance Corporation of India v/s Neelam MehtaThe case arose following the refusal
of LIC to pay the insurancemoney following the death of her husband Mahendrabhai Mehta.
LIC hadr e p u d i a t e d t h e l i f e p o l i c y a l l e g i n g t h a t h e h a d h i d f r o m i t t h a t h e
wassuffering from diabetes at the time of taking the insurance policy
i n december 1993. On 6 November 1994 he died following a heart attack. Neelam told
the consumer forum that she came to know that her husbandhad a life policy with lic three
months after his death, when she started receiving 'forms one after another to be filled
through lic agent'. She thenfilled up all the relevant papers.She also formally informed lic about
the death of her husband andclaimed the insurance money. thereupon, lic intimated her that the
claimf o r h e r h u s b a n d ' s i n s u r a n c e p o l i c y w a s r e p u d i a t e d b e c a u s e t h e
l i f e assured had 'deliberately' withheld information regarding his 'pre-existingillness which was
diabetes' and which, it said, had led to his death. it alsoalleged that because of this disease
he had been hospitalised before hisdeath and that he was a insulin-dependent diabetic.
Neelam represented to b o t h t h e b h a v n a g a r a n d a h m e d a b a d o f f i c e s o f l i c a n d
later to its zonaloffice in mumbai
u r g i n g t h e m t o r e c o m m e n d h e r c l a i m t o t h e r e v i e w committee.This request was
made in september 1996 and till now no decisionh a d b e e n t a k e n a n d t h e ' m a t t e r i s
s t i l l u n d e r c o n s i d e r a t i o n ' . s h e a l s o denied that her husband was a diabetic
or that he had been hospitalisedf o r t h i s . H e h a d n o t b e e n t r e a t e d f o r a n y
ailment during the five years
preceding his death, she asserted. The forum comprising its president,K.D. Desai,
members Leena Desai and Malaybhai Kantharia, found that l i c h a d f a i l e d t o p r o v e
t h a t M r. M e h t a h a d m a d e f a l s e s t a t e m e n t a n d misrepresentation about his health.
"the burden of proving that there wassuppression of material fact and that it was made
fraudulently" lied on
lica n d i t h a d f a i l e d t o p r o v e i t , t h e f o r u m o b s e r v e d . L I C t h e r e f o r e
w a s legally and morally duty-bound to pay the claim,
it said.Consumer disputes redressal forum, Ahmedabad, has directed LICof India to pay
up Rs. 50,000 plus 12 per cent interest for seven years, asi n s u r a n c e m o n e y d u e t o h e r
after her husband's death. the forum alsoordered payment of Rs. 5000 for
c a u s i n g m e n t a l a g o n y, h a r d s h i p a n d inconvenience to Neelamben. It granted Rs. 3000
as cost.
(3)
Life Insurance Corporation of India v/s Lily Rani
RoyT h e p e t i t i o n e r h a s p u r c h a s e d a l i f e i n s u r a n c e p o l i c y f r o m t h e a p
p e l l a t e a n d p r e m i u m s w e r e p a i d r e g u l a r l y. T h e m a t u r i t y o f t h e s a i d policy
was in 1978. Because of some personal reasons the claim was notfiled. The petitioner
had filed the claim after 13 years of its maturity. TheL I C o f I n d i a r e j e c t e d t h e p a y m e n t
o n a p l e a t h a t c l a i m i s t i m e b a r r e d claim and as such the claim will not be paid.The
petitioner had filed a complaint with Consumer Council with ar e q u e s t t o d i r e c t t h e L I C
f o r t h e p a y m e n t o f t h e m a t u r i t y c l a i m a s t h e policyholder had paid the entire
premium till the date of the maturity andhas the right to receive the claim amount.
Assured held LIC guilty under Consumer Protection Act, 1986 Section (I) (g) for deficiency
in
service.B u t , t h e L I C o f I n d i a p l e a d e d t h a t t h e C o r p o r a t i o n w i l l
bemaintaining the records for a period of five years on

l y a n d t h e Corporation has received the claim notice from the

p e t i t i o n e r i n 1 9 9 0 which is far beyond the time. The LIC also produced a photo copy of the
maturity claims payment register showing the payment
o f t h e complainants money.After examining all the facts, the State forum has declared that
the p e t i t i o n e r s c a n n o t c l a i m t h e p a y m e n t o f p o l i c y a s i t i s a l r e a d y t
i m e barred. On the decision of the State Commission, the petitioners
h a v e filed a petition with the National Commission.The National Commission, after verifying
the terms of the policy,has opined that though the payment of claim istime barred, the
insurancec o m p a n y s h o u l d h a v e g i v e n n o t i c e t o t h a t e f f e c t o r s h o u l d i n c l u d e
a clause in the policy document stating that the time barred maturity claimswill not be paid. As
the Corporation has filed to bring this information tothe notice of the policyholder or failed to
create the awareness among the policyholders, it has failed in its duties and as such it is
liable to pay theclaim to the petitioners. Thus, the National Commission has ordered
the payment of time barred maturity
claims s h o w i n g t h e p a y m e n t o f t h e complainants money.After examining all
the facts, the State forum has declared that
the p e t i t i o n e r s c a n n o t c l a i m t h e p a y m e n t o f p o l i c y a s i t i s a l r e a d y t
i m e barred. On the decision of the State Commission, the petitioners
h a v e filed a petition with the National Commission.The National Commission, after verifying
the terms of the policy,has opined that though the payment of claim istime barred, the
insurancec o m p a n y s h o u l d h a v e g i v e n n o t i c e t o t h a t e f f e c t o r s h o u l d i n c l u d e
a clause in the policy document stating that the time barred maturity claimswill not be paid. As
the Corporation has filed to bring this information tothe notice of the policyholder or failed to
create the awareness among the policyholders, it has failed in its duties and as such it is
liable to pay theclaim to the petitioners. Thus, the National Commission has ordered
the payment of time barred maturity claims.
Conclusion
T h e i n s u r a n c e b u s i n e s s i s m a j o r s e r v i c e o r i e n t e d b u s i n e s s i n t h e world. The
services offered by the insurance industry is well recognizedand utilized by the
general public and commercial sector of the world.The life insurance business has
covered nearly 40% of the population of the world.Global players with strong
brands in the insurance industryt o d a y s e t u p t h e i r b a c k o f f i c e o p e r a t i o n i n l o w
c o s t c o u n t r i e s , m a n a g e capital on a global basis, make use of their special skills
world wide anduse their superior managerial ability to secure leadership positions in
theindustry.The claims management is an integral part of insurance. It
involvest h e s t o r a g e , p r o c e s s i n g a n d t r a n s m i s s i o n o f i n f o r m a t i o n r e l a
t i n g t o settlement of insurance claims. The use of Information Technology
also plays a very important role in claims settlement.In managing the claimsh a n d l i n g
f u n c t i o n , i n s u r e r s s e e k t o b a l a n c e t h e e l e m e n t s o f c u s t o m e r satisfaction,
administrative handling expenses, and claims overpayment leakages. As part of this
balancing act,fraudulent insurance practicesarea m a j o r b u s i n e s s r i s k t h a t m u s t b e
managed and overcome.
Disputes b e t w e e n i n s u r e r s a n d i n s u r e d s o v e r t h e v a l i d i t y o f c l a i m s
o r c l a i m s handling practices occasionally escalate into litigation which should
besolved with due care.In this fast developing scenario it will not be enough if

companies
havet h e f u t u r i s t i c s t r a t e g i e s . I m p l e m e n t a t i o n o f t h e s t r a t e g i e s , e f f e c t i v e l y a
dapting them to ongoing changes can spell success. The success of claimmanagement depends
on the satisfaction of the customers. The customersare attracted to an insurance company
by its state of art claim
service.T h e r e f o r e , b e f o r e d e s i g n i n g a n I T s y s t e m f o r c l a i m m a
n a g e m e n t , customer s expectations are to be taken in to account. The
c u s t o m e r s , their needs, knowledge of how the market works, and what they
want,t h e s e a r e t h e t h i n g s t h a t a r e i m p o r t a n t f o r a n i n s u r a n c e c o m p a n y
f o r serving the customers in a better manner through better technology.
Bibliography
The information is taken from various sources such as books, magazines,articles, internet
etc.Books:Theories and Practices in InsuranceInsurance watchBusiness worldBusiness today
Webliography
www.insuremagic.comwww.licindia.comwww.icicprulife.comwww.insurancewatch.comwww.insur
anceonline.comSearch engines:www.google.comwww.ask.com