Delay in intimation of insured person’s death insufficient ground to reject claim: FCC

ISLAMABAD: The Federal Constitution Court (FCC) held that delay in intimation of insured person’s death to insurance company is insufficient ground to justify rejection of his claim.

The principal objection raised by the M/s Pak Qatar Family Takaful Limited (petitioner) was that intimation of death was not made immediately.

The facts of the case are that the deceased, Muhammad Waqas Anjum, on 05-03-2019 obtained a life insurance policy from petitioner company under Policy No. CL-201900948966, providing a death cover of Rs38,50,000/- on the basis of a regular contribution for three years, with a membership term of five years. Waqas nominated Arshia Kanwal (respondent) as his legal beneficiary.

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Unfortunately, Muham-mad Waqas Anjum passed away on 08.05.2019, only a few days after commencement of the policy. The death intimation was conveyed to the petitioner through email by Muhammad Khalid, the stepfather of the respondent. The claim lodged by the respondent was; however, denied by the petitioner vide letter dated 01.10.2021 on the following grounds: (i) that intimation of death was not made immediately; (ii) that the nominee, Ms. Arshia Kanwal, though nominated, was not the real sister of the deceased; (iii) that the requisite medical record regarding the admission of the deceased at DHQ Hospital, Mandi Bahauddin, had not been provided; and (iv) that the deceased was allegedly a drug addict.

Aggrieved by the non-settlement of her claim, the respondent filed a complaint on 08.10.2019 before the Federal Insurance Ombudsman, which on 06.06.2022 directed the petitioner to pay the claim amount to the nominee, Arshia Kanwal, in terms of Section 130 (1) of the Insurance Ordinance 2000 within thirty days.

The Ombudsman further held that the petitioner had inordinately delayed payment without any lawful justification and was; therefore, liable to pay liquidated damages to the complainant under Section 118(2) of the Ordinance.

Thereafter, the respondent filed a writ petition before the Islamabad High Court (IHC) seeking issuance of directions for implementation of the order dated 06.06.2022 passed by the Federal Insurance Ombudsman. The IHC allowed the writ petition; therefore the company approached the FCC.

The FCC judgment, authored by Justice Muhammad Karim Khan Agha, noted that Waqas demise on 08.05.2019 is an admitted fact, while Arshia Kanwal (respondent) as the sole nominee is duly recorded in the policy documents; therefore, is entitled to receive the insured amount. It said that the petitioner though declined her claim through letter dated 01.10.2021. However, no independent or contemporaneous documentary evidence was placed on record to substantiate the grounds on which the claim was rejected.

Similarly, the allegation that the deceased was a drug addict remained wholly unsubstantiated, as no medical record was produced to establish that his death was attributable to addiction. Even the investigation report does not disclose any material indicating misrepresentation or concealment at the time of obtaining the policy.

The judgment observed that these aspects were examined in detail and rightly decided by the Federal Insurance Ombudsman while deciding Complaint No. 1733 of 2019 on 06.06.2022.

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