Chapter: 3.1.8 Consumer Jurisdiction of Insurance related claims

Consumer Jurisdiction of Insurance related claims:

"DEFICIENCY IN SERVICE" rendered by Insurance Company
The National Commission held in the case of UMEDILAL AGGRARWAL V/S UNITED INDIA INSURANCE CO.LTD.(1989) 3 COMP.LJ 143 (NC), II (1992) CPJ 451 (N.C.) as follows:

"DEFAULT OR NEGLIGENCE IN REGARD TO SETTLEMENT OF AN INSURANCE CLAIM WILL CONSTITUTE 'DEFICIENCY' IN SERVICE RENDERED BY THE INSURANCE COMPANY."

The above decision of the National Commission firmly established in principle that consumers affected by failure of Insurance Companies in providing service or carrying out its obligations would be entitled to approach the Consumer Court for an inexpensive and speedy red reseal.

National Commission further observed as follows:
"Having regard to the philosophy of the Consumer Protection Act, 1956, and its avowed object of providing cheap and speedy redressal to consumers affected by failure on the part of persons providing service for a consideration to properly carry out their obligations, we do not find it possible to hold that settlement of an insurance claim will not be covered by the expression 'INSURANCE' occurring in Sec.2(1) [should be 2(1)(o)]. Whenever there is a default or negligence in regard to such settlement of an insurance claim that will constitute a deficiency in the service on the part of the insurance company and it will be perfectly open to the concerned aggrieved consumer to approach the redressal Forum under the Act and seek appropriate relief. We accordingly overrule the objection raised by the Insurance Company questioning the jurisdiction of the State Commission to adjudicate upon the complaint."