The district consumer disputes redressal forum (DCDRF)–North has directed State Bank of India (SBI) and its insurance company to pay a compensation of Rs. 8.68 lakh for pre-closing the insurance policies of a consumer without prior information.
The complainants, V. Sree Manikandan and Vanitha Sree Manikandan of R.A. Puram, had taken six single SBI Life Sukh Jeevan policies.
Subsequently, they took a loan of Rs. 12.25 lakh from SBI. They gave their policies as collateral security on April 2, 2002.
In 2011, in response to a letter they sent SBI, the complainants were informed that their policies, whose maturity value was Rs. 25 lakh, had been cancelled way back in 2005, and a sum of Rs. 16.91 lakh had been realised.
After deducting the loan amount and interest, Rs. 85,000 had been transferred to the complainant, said SBI.
The complainants accused the bank of deficiency of service as they were not informed about surrendering the policies. The bank’s counsel claimed the complaint was false. He said the loan amount had to be repaid within a period of three years with interest. However, as the complainant did not make the repayments properly, the policies were surrendered to the insurance company.
The insurance company’s counsel said that since the complainants had assigned the policies in favour of the bank, they had no right over them.
The consumer forum said that surrendering the policies and adjusting the amount towards loan without any instruction from the complainants would amount to deficiency in service.
Pre-closing the policy without informing the customers had caused them a financial loss of Rs. 8.68 lakh and severe mental agony, said the forum, comprising its president R. Mohandoss and members A. Dayalan and T. Kalaiyarasi.
