Hyderabad consumer commission criticises insurers over address mishandling and unfair policy practices

A Hyderabad consumer commission has ordered an insurer to refund Rs 10 lakh and pay compensation to a retired professor after ruling that she was unfairly denied meaningful free-look rights due to incorrect address documentation and misleading sales practices.

A Hyderabad consumer commission has ordered an insurer to unwind a Rs 10 lakh policy sold to a 73-year-old retired associate professor, ruling that she was denied any real chance to use the post-sale free-look protection because the policy papers were sent to her permanent address while she was abroad. The order of 27 August directs the insurer to refund the invested sum, while the bank and insurer must jointly pay Rs 50,000 in compensation and Rs 10,000 in costs. The address point matters because current insurer guidance and IRDAI instructions tie free-look rights to the delivery or dispatch of the policy kit and stress that insurers must be able to show the documents reached the policyholder through the designated channels. (indianexpress.com)

According to the complaint, the woman had gone to a bank branch on 4 September 2023 to transfer money to her son in the US when staff introduced her to two agents who, she said, presented the product as a one-off placement of Rs 10 lakh promising returns of Rs 2.67 lakh a year after four years. She told the forum she was a retired academic drawing a monthly pension of Rs 57,000, yet the paperwork recorded a salary of Rs 1 crore. She also alleged that signatures were taken on loan papers and that what had been sold as a single investment was in fact an annual premium commitment. The outline has echoes of an older Hyderabad complaint reported by The Times of India, in which CB Rajendra Prasad said a Tata AIA representative sold him what was pitched as a one-time investment linked to his son living in the US. (indianexpress.com)

The bank denied taking signatures on blank forms and argued that the insurance contract was between the customer and the insurer, not the bank. The insurer, represented by Areness Law, said the policy had been issued only after her request and approval and that the physical pack was dispatched on 18 September 2023 in line with regulatory requirements. But the commission focused on the fact that the proposal form carried both a permanent and a current address, while the welcome letter was sent to the address where she was not then living. That point is central to the way insurers themselves describe the free-look process: guidance published by ICICI Prudential tells policyholders to verify that both permanent and communication addresses are correct in the policy kit and says the review period is linked to the sending and receipt of that kit. (indianexpress.com)

In its reasoning, the commission said the statutory chance to cancel “cannot be said to be meaningfully provided” in circumstances where the papers were sent to the wrong residence while the customer was outside India. It also said a senior citizen was “entitled to expect honest, fair and transparent treatment” and could not simply be presumed to understand complicated policy terms without explanation. That approach closely tracks IRDAI guidance stating that insurers should obtain or auto-collect acknowledgement of delivery and should make clear that the delivery date is the date used for examining any free-look request. (indianexpress.com)

The order also fits a broader pattern in Hyderabad’s consumer fora, where banks have recently been told that paperwork alone does not answer a complaint if the customer is left exposed. Financial Express reported this week that commission president B Uma Venkata Subba Lakshmi and member C Lakshmi Prasanna ordered a branch manager to return a retired bank employee’s missing property deeds or reconstruct them at the branch’s expense, awarding Rs 2 lakh in compensation, Rs 15,000 in costs and 45 days for compliance. LiveLaw reported in February 2024 that the same Commission-I bench directed Union Bank to repay Rs 67,437.52 to senior citizen Umabala Chunduru, together with Rs 20,000 compensation and Rs 20,000 in litigation costs, after finding the bank had not shown that one-time passwords for a series of unauthorised transactions had reached her registered phone. (financialexpress.com)

Hyderabad consumer bodies have also handled earlier disputes over insurance being marketed as an investment product. In the 2020 case cited by The Times of India, Tata AIA was ordered to refund Rs 2 lakh, pay Rs 50,000 in compensation and Rs 10,000 in costs after Prasad said a policy arrived in his son’s name with forged signatures. The insurer argued that he should have used the free-look period, but the forum said it had not produced evidence proving the signatures were genuine and faulted the money being placed in an insurance policy rather than the long-term investment he said he had been promised. (timesofindia.indiatimes.com)

A separate Hyderabad ruling reported by NewsMeter in April 2024 shows the same scepticism towards insurers relying on technical objections after taking a customer’s money. In that case, Commission-III directed Reliance Nippon Life Insurance to honour a Rs 56 lakh claim brought by Mahalakshmi Balasubramaniam after her husband’s death, with 9 per cent interest from 25 February 2020, Rs 1 lakh for mental agony and Rs 10,000 in costs. The commission said an insurer that had issued a policy after assessing the insured’s health could not later reject the claim on a condition already disclosed, and it criticised the company for failing to produce original documents and medical reports despite directions to do so. (newsmeter.in)

Taken together, the cases suggest Hyderabad’s consumer commissions are looking beyond whether a signature appears on a form and asking whether the customer was actually told what was being bought, where the papers were sent and whether the promised review window could realistically be used. In the professor’s case, that approach ended with an order to close the policy, refund the Rs 10 lakh from the date of the policy until realisation, and make the bank and insurer jointly answer for compensation and costs. For banks and insurers selling through branch networks, the warning is plain: proof of dispatch is not the same as proof that an older customer had a fair opportunity to understand and reject the product. (indianexpress.com)