would denial / delay in settlement of Insurance claim, filed as Cheating !!

It all happened in Aug 2018 ~ Kerala received heavy monsoon rainfall, which was about 75% more than the usual rainfall. The dams received copious inflow and were opened when the water level rose – the let out water too flooded low-lying areas as there was no escape route for the rain water.  For the first time in the state's history, 35 of its 54 dams were opened. Kerala Chief Minister Pinarayi Vijayan undertook  an aerial survey !  of flood-ravaged districts of the State.  He spoke about financial aid promised by UAE.  Centre pitched with its share of aid, Keralites settled abroad started sending funds, so did other parts of India.

A report by Jacob P. Alex, an amicus curiae appointed by the Kerala high court, said the devastating floods of 2018 was the result of bad dam management by the state government. All 79 dams in the state were maintained with the objective to generate hydroelectricity or irrigation and controlling flood wasn’t their purpose, amicus curiae Jacob P Alex’s report highlighted. “The major concern of the dam operators was to maximise reservoir levels, which conflicted with the flood control purpose for which the dams could be utilised. The 'flood cushion' of reservoirs — the storage space earmarked in dams to absorb unanticipated high flows — needed review as per the latest guidelines,” Alex wrote in his report. “Sudden release of water simultaneously from different reservoirs, during extreme rainfall aggravated the damage,“it said adding that various alerts —blue, orange and red—had been issued not in accordance with the EAP guideline.   There have been criticisms that the worst disaster was man-made and not managed properly by the State Govt. 

In a totally different perspective, as flood waters receded in Kerala, insurers were flooded with claims.  Perhaps this is nothing new for many Insurers as we are seeing natural disasters, cyclones, floods, avalanches, in various parts fo the country year after year.   Insurers started setting special cells, sending their personnel from various places to ensure receiving claims, deputing surveyors, processing and settling claims speedily.  Immediately after the floods the  total claims were estimated to be around  ₹600 crore the least.  Most Insurers simplified their processes and started settling claims waiving many documents and sometimes based on simple observation and single paged reports, thus mitigating the financial suffering.

There were claims for automobiles [two wheelers, cars, trucks, buses and ..] as also dwellings, religious places, godowns, manufacturing premises – all reportedly inundated with flood water and in some cases claiming that the property had simply been washed away, which would make assessment more difficult.   

Meantime, a report crafted by a team headed by Madhav Gadgil, ecologist and founder of the Centre for Ecological Sciences at the Indian Institute of Science, Bengaluru reported that earlier recommendations  were strong enough to protect the sensitive Western Ghat region. The committee had suggested that 140,000 kilometres of the Western Ghats be classified in three zones as per the requirement of environmental protection in the areas. In some areas, the committee recommended strong restrictions on mining and quarrying, use of land for non forest purposes, construction of high rises etc. The report was first submitted to the government in 2011. But the Kerala government rejected the committee report and did not adopt any of its recommendations. Speaking to various regional media, Madhav Gadgil stated  that irresponsible environmental policy is to be blamed for the recent floods and landslides in Kerala. He also called it a "man-made calamity". Environmentalists also pointed fingers at the extensive quarrying, mushrooming of high rises as part of tourism and illegal forest land acquisition by private parties as major reasons for the recent calamity.

What has been reported in Outlook & Times of India of date is unnerving for the Insurers.  There are cases of prompt and expeditious settlements, there could also be some delay arising out of various factors including lax approach – there have been occasions when claimants have filed before Ombudsman / Consumer Forum alleging ‘delay / improper service’ – but can non-settlement of an insurance claim be filed as ‘cheating case’  !!

Today’s newspaper reports state that  On June 10, the Madras High Court  declined to restrain the city police from pulling up the head honchos of Cholamandalam MS General Insurance Company who have been accused of cheating. Justice N Anand Venkatesh rejected a plea from the company for a court direction to not harass its employees over a case of cheating registered by the Central Crime Branch (CCB).

An FIR was filed following a complaint from the owner of a Jaguar car against the insurer for failing to give compensation for the damage caused to his vehicle during the Kerala floods in August last. When the case came up for hearing, the judge clarified that once an FIR was filed, the court cannot grant such relief and that the petitioner can only approach the court concerned to seek anticipatory bail.

The matter relates to an insurance claim plea of Sunpark Global Impex, which owns the car. According to the claim, the vehicle got damaged during the Kerala floods. The claim reportedly was made for Rs 43 lakh. However, based on doubts with regard to the occurrence of the loss in the flood and the fact that the ownership of the car was transferred to another person, the company rejected the claim. Aggrieved, the car owner lodged a complaint with the CCB for offences under section 420 of IPC against the insurer. Claiming that the dispute is a simple damage claim under a contract of insurance which is civil in nature, the petitioner has moved the court contending that failure on part of the insurer to settle the claim cannot be the subject matter of such a criminal complaint.

The insurers contend that they have  reasons to believe that the vehicle which was already damaged in Chennai floods on Dec 2015 may be used for a fresh claim as if damaged in Kerala floods on Aug 16, 2018. The wreck appears to be used as a wreck without repairs," the company said.

With regards – S. Sampathkumar

11^th June 2019.