Consumer court orders relief to be paid to defrauded policy holders

Consumer Court Chikkamagaluru district has delivered justice to policy holders of LIC, Udupi Region wherein crores of premium amounts were embezzled by its agents.

Meanwhile, Chikkamagaluru police headed by SP Annamalai have arrested LIC agent Devaraj and have taken him to judicial custody. Another accused Shobha Rani has obtained anticipatory bail.

Speaking to the media, Human Rights Protection Foundation President Dr Ravindranath Shanbhag said around June-July 2016, a few people of Kadur in Chikkamagalur District in Karnataka, who had bought life insurance from LIC, under the Jeevan Madhura Micro Insurance Scheme (MI Scheme) approached Human Rights Protection Foundation, Udupi (HRPF) for assistance in the solution of their problem with the LIC.

Thousands of MI policy holders were dropped from the scheme by LIC, purportedly for not paying premium. In most of the lapsed policies, only one or two premium installments were paid to LIC and some claims were also rejected for the same reason.  Every policy holder had receipts for his payments of premium for all these years. All these receipts carried LIC's official logo.

Three NGOs were appointed by LIC as MI agents. These MI agents appointed sub-agents (SPs) who were mostly anganwadi teachers and agricultural labourers, with the approval of LIC.

These NGOs collected lakhs of rupees from MI policy holders through their SPs. All was well till some MI claims were rejected on the ground that the policies had lapsed due to non-payment of premium. It was found that the premium paid to the MI agent by SPs was not transferred to the LIC.

Most of the policy holders were illiterate, innocent villagers and believed that SPs pocketed the amount paid by them towards MI premium. The SPs were not in the position to show their faces to the public, from the fear of being manhandled and beaten by the irate mobs.

These SPs were forcibly made to refund the amount to policy holders to the tune of Rs one to three lakhs, in order to remain in the villages. Some SPs have taken loans from private banks and pawn brokers by pledging their jewelry to pay off policy holders. Some have even sold small pieces of land they owned.  

HRPF observed that many of the defrauded poor anganawadi teacher-SPs are depressed and may end up committing suicide. If any one of them takes recourse to suicide,  then it may go viral and result in a greater disaster  affecting the LIC's image.  

After scrutinizing all the documents it was found that the agencies were appointed without any background checks. For three years, these agents had not paid the premium paid by the policy holders and LIC had not taken any action against them.

With these two main points in mind the case was filed at the Consumer Court, Chikkamagaluru district. After 16 months of proceedings, the Court passed the order in favor of the policy holders and ordered LIC to pay the policy holders Rs.3000 each as compensation and Rs.1000 each as Court costs, within one month from the date of order.

Twenty five days have lapsed since the Court passed its order but LIC has not yet paid the policy holders. Now the policy holders have written to Prime Minister Narendra Modi and Finance Minister Arun Jaitley to direct LIC to follow the court order. The victims have also threatened to take up indefinite hunger strike if they are denied justice.