The National Consumer Disputes Redressal Commission (NCDRC) recently directed the Life Insurance Corporation (LIC) of India and a company to pay a ₹4.70 lakh death insurance claim to an employee’s widow, despite gaps in premium payments by the employer [LIC v Pittala Pochamma].
Presiding Member Justice Sudip Ahluwalia emphasized that according to the Supreme Court, an employer is considered an agent of the insurer, and the interest of the life assured must be protected.
“The Hon’ble Supreme Court’s view is that in such situations, the employer is regarded as an Agent of the Insurer/Corporation, and the interest of the Life Assured must be safeguarded,” the order dated May 15 stated.
The NCDRC was hearing an appeal by LIC against an order from the Telangana State Consumer Disputes Redressal Commission, which had upheld a District Commission’s directive for LIC and the employer to make the payment.
The complaint was filed by the widow of the deceased after she did not receive the assured sum following her husband’s death.
According to LIC, the deceased had taken voluntary retirement from the company, which led to the cessation of premium payments by the employer, causing the policy to lapse. Therefore, LIC argued it was not liable.
The Commission noted that this argument had already been raised and rightly rejected by the State Commission.
It explained that, as per the Supreme Court’s decision in LIC of India v Rajiv Kumar Bhasker, an employer acts as an agent of the insurer, and the employee should not be penalized for any omissions by the employer in reporting the cessation of employment or for any gaps in premium payments.
Furthermore, the Commission noted that LIC failed to provide any judgment to counter this position. Consequently, it rejected the appeal and held LIC and the employer responsible for paying the ₹4.7 lakh death insurance claim.
LIC was represented by advocate Ankur Goel.
