Insurance co directed to return received premium to nominee

LAHORE: An insurance tribunal has directed an insurance company to return the received premium to the nominee of deceased policyholder.

The tribunal found that the total rejection of the claim would be too harsh. Therefore, it directed to return the received premium to the nominee.

According to details, the mother of a deceased policyholder had filed application that her son had got insurance policy for a period of 20 years from the insurance company with a sum assured of Rs.l0,50,000 with annual contribution of Rs.50,000 on the first due date. He paid first premium but unfortunately, her son died soon after that in Lahore General Hospital due to hepatitis.

Being the nominee, she filed death claim with the company but it rejected the claim on the ground of non-disclosure of pre-insurance ailment, thus, the company contended that the applicant is not entitled to the death claim because the policy holder materially concealed his pre-existing medical condition at the time of submission of proposal form, which is violation of the doctrine of good faith, as the contract of the insurance is based on utmost good faith and the policy holder is bound to disclose all material facts regarding his health in health declaration form.

The relevant forum maintained that the deceased concealed his disease of Hepatitis-A and C at the time of purchasing the policy, which he was bound to disclose. After purchasing the policy, he died it the next month, just after one month. It is active and glaring concealment of facts; therefore, this claim was rightly rejected by the company. However, in the given circumstances of the case, we find that the total rejection of the claim would be too harsh. The company received one premium from the deceased. Under Section 81 of the Insurance Ordinance 2000, they are directed to return the received premium to the petitioner; as such this issue is partly decided in favour of the mother of policyholder.

As the claim of the mother has been rejected; therefore, she is not entitled to any liquidated damages.

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