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Insurance Co asked to pay Rs 4.94L to bank for customer fraud

A consumer forum here has ordered United India Insurance to pay Rs 4.94 lakhs to Thane District Central Co-operative Bank for being deficient in its services with regard to the bank's claim in a customer fraud case.

The bank, in its complaint, told the Thane District Consumer Redressel Forum (TDCRF) that between May and October 2003, some of the bank employees had misappropriated a sum of Rs 4.94 lakhs from the account of one of the customers.

The bank had immediately brought it to the notice of the insurance company and also lodged a police complaint.It had lodged a claim for the amount with United India Insurance from which it had taken insurance policy.

The insurance company, despite more than 24 reminders, slept over the claim, the bank informed the forum.

The insurance firm argued before the forum that the policy was to be honoured for limited contingencies like fire, theft, floods, etc, and not if there was a fraud in the bank.

TDCRF president Umesh Jhavalikar and member N D Kadam dismissed the insurance company's stand and stated that the bank had taken an indemnity policy from the insurance firm, which was in force at the time of fraud by its employees.

The forum noted that after receipt of the claim and documents relating to it in August 2004, it was the statutory responsibility of the insurance firm, as per section 9 of IRDA (Protection of Policyholders' Interests) Regulations, to appoint a surveyor within 72 hours which it had not done.

Despite three reminders till January 16, 2005, the insurance firm had not taken any action on the same and this amounts to violation of IRDA regulations, it said.

 Article referred: http://www.business-standard.com/article/pti-stories/insurance-co-asked-to-pay-rs-4-94l-to-bank-for-customer-fraud-114102200352_1.html

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