THIRUVANANTHAPURAM, December 24, 2011 The Hindu
The State Consumer Disputes Redressal Commission has pulled up HDFC Standard Life Insurance for trying to evade the conditions set by the Insurance Regulatory and Development Authority (IRDA) and for unfair trade practices. It has asked the insurance company to return the entire investments of one of its clients, who had taken a unit-linked insurance policy (ULIP) worth Rs.50 lakh, without any deductions and to pay compensation for deficiency of service.
The amount, which comes to nearly Rs.63 lakh, is the highest monetary compensation awarded by the State Consumer Disputes Redressal Commission ever to a consumer, in any case dealing with unfair trade practice or deficiency of service.
The complainant, E.M. Babu, of Kothamangalam, Ernakulam, is an NRI industrialist. He invested in two HDFC Unit-Linked Pension Plus Scheme policies, worth Rs.25 lakh each on March 17, 2008. He handed over copies of his passport, his visiting card, and two cheques — each for Rs.25 lakh — and affixed his signature on the blank proposal forms, which the insurance company representative assured would be taken care of.
He was told that he would get 15 days from the time of the receipt of the policy to return the same in case he was not satisfied with its terms and conditions. The cheques he had given were encashed by HDFC on March 23.
The complainant received his policy document only on May 6. But he was stunned to find that though the document was in his name, the mailing address in it was someone else's.
The said the address had not been in any of the documents he had handed over to the company. Also, HDFC had already deducted 10 per cent as service charges from his total investment, without prior information. Hence he sought a return of his investment from HDFC.
The insurance company rejected his claim and said that the policy document had already been received on April 13 in the address of one Mia Alex of Pandalam, Pathanamthitta, who, the company claimed, was the complainant's niece. In an email, HDFC informed him that the particular business of the client had been generated on a lead provided by Ms. Alex.
The complainant denied that he had any niece by the name of Mia Alex. It appeared that the business was canvassed by Ms. Alex, an air hostess, but it was logged in the name of Raghu, an agent of HDFC, as Ms. Alex did not have an IRDA licence for business consultancy. This was a violation of IRDA conditions.
Violation of norms
The opposite party, HDFC Standard Life Insurance, denied all allegations made by the complainant. It claimed that the proposal form had been filled up and signed by the complainant himself and that the company had delivered the policy on time to the address given by the complainant himself in the form. It was silent on the commission paid to Ms. Alex or how it was made out that she was the niece of the complainant.
The Commission, which examined the proposal form, found that there was substance in the complainant's argument that he had handed over a signed but blank form because many columns relating to personal facts were left unfilled in the document. It also pointed out that the insurance company could not explain how a document in the name of the complainant got mailed to some other address.
The Commission pointed out that the complainant was entitled to return the policy document and seek a refund. However, HDFC claimed that the policy had actually crossed a year and that as it was a ULIP policy and linked to the share market, the Net Asset Value (NAV) of the complainant — who had invested Rs.50 lakh — stood at only Rs.12 lakh.
The Commission, presided over by a former judge of the High Court, K.R. Udayabhanu, rejected this argument and directed HDFC to return the entire investment of Rs.50 lakh made by the complainant with seven per cent interest from the date on which the complainant's cheque had been encashed by the insurance company and Rs.10,000 as costs.
Policy document got mailed to wrong address
10% of total amount deducted as service charge
The State Consumer Disputes Redressal Commission has pulled up HDFC Standard Life Insurance for trying to evade the conditions set by the Insurance Regulatory and Development Authority (IRDA) and for unfair trade practices. It has asked the insurance company to return the entire investments of one of its clients, who had taken a unit-linked insurance policy (ULIP) worth Rs.50 lakh, without any deductions and to pay compensation for deficiency of service.
The amount, which comes to nearly Rs.63 lakh, is the highest monetary compensation awarded by the State Consumer Disputes Redressal Commission ever to a consumer, in any case dealing with unfair trade practice or deficiency of service.
The complainant, E.M. Babu, of Kothamangalam, Ernakulam, is an NRI industrialist. He invested in two HDFC Unit-Linked Pension Plus Scheme policies, worth Rs.25 lakh each on March 17, 2008. He handed over copies of his passport, his visiting card, and two cheques — each for Rs.25 lakh — and affixed his signature on the blank proposal forms, which the insurance company representative assured would be taken care of.
He was told that he would get 15 days from the time of the receipt of the policy to return the same in case he was not satisfied with its terms and conditions. The cheques he had given were encashed by HDFC on March 23.
The complainant received his policy document only on May 6. But he was stunned to find that though the document was in his name, the mailing address in it was someone else's.
The said the address had not been in any of the documents he had handed over to the company. Also, HDFC had already deducted 10 per cent as service charges from his total investment, without prior information. Hence he sought a return of his investment from HDFC.
The insurance company rejected his claim and said that the policy document had already been received on April 13 in the address of one Mia Alex of Pandalam, Pathanamthitta, who, the company claimed, was the complainant's niece. In an email, HDFC informed him that the particular business of the client had been generated on a lead provided by Ms. Alex.
The complainant denied that he had any niece by the name of Mia Alex. It appeared that the business was canvassed by Ms. Alex, an air hostess, but it was logged in the name of Raghu, an agent of HDFC, as Ms. Alex did not have an IRDA licence for business consultancy. This was a violation of IRDA conditions.
Violation of norms
The opposite party, HDFC Standard Life Insurance, denied all allegations made by the complainant. It claimed that the proposal form had been filled up and signed by the complainant himself and that the company had delivered the policy on time to the address given by the complainant himself in the form. It was silent on the commission paid to Ms. Alex or how it was made out that she was the niece of the complainant.
The Commission, which examined the proposal form, found that there was substance in the complainant's argument that he had handed over a signed but blank form because many columns relating to personal facts were left unfilled in the document. It also pointed out that the insurance company could not explain how a document in the name of the complainant got mailed to some other address.
The Commission pointed out that the complainant was entitled to return the policy document and seek a refund. However, HDFC claimed that the policy had actually crossed a year and that as it was a ULIP policy and linked to the share market, the Net Asset Value (NAV) of the complainant — who had invested Rs.50 lakh — stood at only Rs.12 lakh.
The Commission, presided over by a former judge of the High Court, K.R. Udayabhanu, rejected this argument and directed HDFC to return the entire investment of Rs.50 lakh made by the complainant with seven per cent interest from the date on which the complainant's cheque had been encashed by the insurance company and Rs.10,000 as costs.
Policy document got mailed to wrong address
10% of total amount deducted as service charge
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