Page 50 - The Insurance Times August 2022

of Rs.14,680 crore under the Covid health insurance government's move to acquire land belonging to the
programmes. Amarnath Shrine Board. There were protest rallies, strikes
and riots, due to which curfew was imposed. On July 25,
The rest of the claims were arbitrarily been rejected with- 2008 at around 10.30 am, a mob of around 200-250 per-
out citing any valid reason or specifying the reason for de- sons armed with lathis and stones gathered at the factory.
nial or rejection of claims by referring to the corresponding The mob started rioting, entered the factory, damaged
policy conditions, the petition stated. property, and set fire to stock.

While on the other hand, only a handful of people got por- Due to damage to the units, the factory had to stop its op-
tion of the total treatment cost at hospitals as their claims
erations completely. The disruption continued till August
from the insurance companies.
31,2008. After the agitation subsided, it took another seven
days to restore the plant, after which production restarted
The social trust also claimed that it discovered that the poli-
on September 8, 2008.
cyholders were receiving just 45-80 % of the overall hospi-
tal expenses because they were embroiled in a fight be-
The insured lodged a claim, both for loss due to riots and
tween hospitals and insurance companies over the treat-
arson, and also for consequential loss due to stoppage of
ment of consumables. Despite having comprehensive insur-
operations. The surveyor appointed by the insurer assessed
ance coverage.
the loss under the Fire Policy at Rs. 1,42,88,101, and the
claim was settled at Rs. 1,32,93,663.
More important, in terms of the year on year growth of
the insurance companies under the head of advertisements
The claim under the other policy for Consequential Loss was
were outrageous, the petition stated. The marketing spend
assessed only for a period of six days spent on restoration
of these companies did not actually correspond with the
of the factory to make it operational again. The period prior
respective spend and reach of these companies.
to August 31, 2008, during which the factory remained
closed due to riots and arson, was rejected as not being
The petitioner asserts that the marketing and customer
covered under the policy.
reach of the insurance companies in the private sector do
not correspond with their marketing spend, and the peti-
The insured wrote several letters regarding the claim of Rs.
tioner is concerned that these sums are being syphoned off
3,06,54,018 for the preceding period from July 25, 2008 to
by the insurance companies under the guise of advertising.
August 31, 2008. As the insured filed a complaint before
the National Commission seeking a reimbursement of Rs.
The petitioner compares the above numbers with a few of
3,06,54,018 along with interest, compensation and costs.
the rapidly expanding companies in India with significant
revenue from operations and wider customer reach, such
The insurer contested the case, contending that loss due
as Pidilite and Dabur India.
to closure of the factory on account of riots and curfew in
the area could not be considered as an interruption of work
Insurer to pay for loss from stoppage to
due to fire. Hence it had rejected the claim for the period
avert damage prior to August 31, 2008.
BBF Industries, a Ludhiana-based company, had two manu-
facturing units for making cartons and packaging material. The Commission concluded that the claim for consequen-
It had obtained two insurance policies from United India tial loss for the entire period of 45 days worked out to Rs.
Insurance-one for Standard Fire and Special Perils with a 1,06,46,422, when computed according to the formula
coverage of over Rs 60 crore, and the other for Consequen- mentioned by the surveyor in the survey report.
tial Loss (Fire) Policy with a coverage of Rs 15 crore. Both
the policies were valid from October 29, 2007 to October Accordingly, by its order of June 1, 2022, delivered by Deepa
28, 2008. Sharma along with Subhash Chandra, the National Commis-
sion ordered the insurer to pay Rs. 1,06,46,422 along with
In July 2008, there was huge agitation against the 9 per cent interest and cost of Rs. 1 lakh.

50 The Insurance Times, August 2022