Employer, too, liable for group policy lapses

If an employee's name is inadvertently omitted, he would still get the insurance coverage

Hanhumantha Bylapattar was working as a bus conductor with North Eastern Karnataka Road Transport Corporation (NEKRTC). As an employee of NEKRTC, he was covered under a group life insurance policy from Bajaj Allianz Life Insurance. The policy provided for a coverage of Rs 3 lakh for which a premium of Rs 50 a month was deducted from his salary.

When he expired, his widow lodged a claim. As the insurer did not settle the claim, she approached the Bellari District Forum by filing a complaint against NEKRTC and Bajaj Allianz.

The insurer contested the case, saying that the policy which was originally issued could be extended for four years through renewal by mutual consent. And though the insurer had received a total annual premium of Rs 63.33 lakh from NEKRTC, along with a list giving the details of its employees, the names of 70 employees, including that of Bylapattar were omitted. NEKRTC, then, requested the insurer to include these 70 names. However, while this correspondence was going on, Bylapattar expired on May 28, 2007. Bajaj Allianz contended that it was justified in refusing to settle the claim because Bylapattar’s name was not on the list and claimed that his wife had no right to file the complaint since the master policy had been issued to NEKRTC.

The Forum observed that the mistake had occurred as NEKRTC had failed to submit all the names to Bajaj Allianz. So the complaint against the insurer was dismissed, but NEKRTC was held liable to settle the claim. The Forum directed the corporation to pay Bylapattar’s wife the insured amount of Rs 3 lakh, along with interest at 18 per cent a year from the date of filing the complaint. Additionally, Rs 10,000 was awarded as compensation for mental agony and Rs 5,000 towards litigation costs.

NEKRTC challenged the order before the Karnataka State Commission which dismissed its appeal. The corporation carried the matter in revision.

The National Commission observed that there was no dispute about Bylapattar’s employment. Also, he was entitled to coverage as he was paying a premium every month from his salary. While his name was inadvertently omitted in the initial list, NEKRTC had later submitted an additional list of 70 person which included Bylapattar name. The Commission observed that Bajaj had been paid premium to cover the employees, including the 70 persons whose names were omitted by mistake.

The National Commission observed that NEKRTC was at fault for not submitting the full list, so it would be liable for this lapse. Bajaj Allianz, too, would be liable, as it had collected the full premium which included the amount payable for the 70 persons, whose names were missing from the list furnished by NEKRTC. The Commission concluded that the refusal to settle Bylapattar’s death claim constituted an unfair trade practice.

Accordingly, by its order of May 15, 2017, delivered by S M Kantikar for the Bench along with B C Gupta, the Bench held both NEKRTC and Bajaj Allianz liable to settle the claim as awarded by the District Forum. However, the liability was apportioned, where 75 per cent would have to be paid by NEKRTC and 25 per cent by Bajaj Allianz.
 

The author is a consumer activist