In recent years, the state governments and the Centre have introduced a number of insurance schemes to help those in the lower economic strata. However, many beneficiaries have failed to get any advantage from such welfare schemes because of the negligence of those entrusted with managing the scheme.
Here is a classic case that pertains to a welfare scheme introduced by the Uttar Pradesh government to provide health and accident insurance to college students. Called the Group Student Safety Insurance and Group Janata Personal Accident Policy, the schemes covered students of government-aided and government-recognised institutes in the state. Each student had to pay Rs 22 for the annual insurance premium at the time of admission and the colleges had to remit this amount within a specified time to the National Insurance Company.
Accordingly, when Sharif Ahmad got admission in DAV (PG) College for a postgraduate course in economics in August 1999, he paid the premium along with his admission fee. However, on December 8, of the same year he died in a road accident. When his parents sought the insured amount, the insurance company said he was not even covered under the scheme since the college had not submitted the insurance premium before his death.
The National Consumer Disputes Redressal Commission here referred to the memorandum of understanding (MoU) signed between the state government and the insurance company. It held that even though the MoU put a responsibility on the college to pay the premium to the insurance company, the insurer too was responsible for collecting the premium from the college and had failed to do that.
The commission also referred to the decision of the apex court in the case of Delhi Electric Supply Undertaking (Desu) vs Basanti Devi. It further held that just as Desu in that case, the college here was acting as an agent of the insurance company in collecting and depositing the premium amount and the insurer was liable for the actions of its agent. So the insurance company had to pay the insured amount, along with interest, the commission held (National Insurance vs DAV (PG) College and Shafeek Ahmad, RP No. 2095 of 2009).
This order of the apex consumer court should act as a wake-up call to insurers taking such schemes lightly — both in respect of collecting the premium and in paying the insured amount, thereby defeating the very purpose of such schemes.