Kathmandu. About four years ago, the Insurance Authority of Nepal (Insurance Committee) ruled in favor of the owner of a controversial death claim. The regulator directed the life insurer to pay the death claim, saying that it did not go against the principle of ultimate good faith on behalf of the insured.
At that time, Nepal Life Insurance had refused to pay the claim saying that the cause of the insured’s death was suspicious. However, in the long-running case, the AUTHORITY ruled in favor of the owner and asked Nepal Life to pay more than Rs 10 million in claims.
Following the death of the insured Jaya Kumar Shrestha, the then insurance committee paid Rs 10 million to Shrestha’s wife Suk Laxmi Shrestha for two insurance policies.
According to the NRA, Nepal Life had issued two insurance policies worth Rs 5 million each in the name of Jay Kumar on August 15, 2018 and January 15, 2018. The insured Jay Kumar passed away on August 26, 2017, less than a year after issuing the policy.
After 19 months of her husband’s death, Suk Laxmi had applied for payment of her death claim to Nepal Life. After a preliminary study of the evidence attached to the application, the Claims Department of Nepal Life had included the medical paper of the insured in the list of further investigations.
Suklaxmi filed a complaint with the Insurance Committee on July 17, 2019, seeking more documents related to the treatment of the insured suspecting that she was already suffering from pneumonia.
Nepal Life had categorised the insured as a dubious claim for not providing medical documents, not submitting a file per copy of the original customer and submitting only one insurance claim. Later, Nepal Life claimed that it was more suspicious as it had applied directly to the insurance committee without asking for medical papers for further investigation.
Proof submitted on behalf of the insured
- Death certificate issued from civil hospital
- Cause of death: heart attack
- Heart attack factor: pneumonia
- Treatment of pneumonia for the first time on August 12, 2019
Nepal Life’s claim
- Not all documentation on prenatal medication
- Submitted claim in the case of only one of the two policies
- Applying to the Insurance Committee while asking for treatment paper
- Submitted claim 19 months after death
- Non-submission of original insurance
- Insured by falsifying details about chronic disease
Insurance Committee decision
- Confirmed death of insured from heart attack
- Contributing factors to death: pneumonia
- The insured has not been confirmed to be chronically ill
- Not acting contrary to the principle of ultimate good faith on behalf of the insured
- Paying both the sum insured and other sum insured as per rules
After the insurance committee sought information, Nepal Life had submitted a written reply on June 27, 2019, stating that the insured Jay Kumar died due to pneumonia, but he did not provide the treatment papers and did not submit the file to the original customer.
After the insurance committee asked Suk Laxmi for documents related to the treatment of her husband Jaya Kumar before her death on August 15, 2017, she submitted the documents related to the treatment before her death at Civil Hospital Minbhawan on August 15, 2018.
In the notice of death in the hospital paper, the cause of death of the insured was mentioned as accidental cause of death (intermediate cause: cardiopulmonary arrest) and the contributing factor was pneumonia (contributory cause: pneumonia).
The insurance committee held that the insurer’s claim was not reasonable as the insurer’s suspicion that the insured may have a chronic disease before insuring on the basis of the contributory pneumonia could not be confirmed.
On the other hand, the committee ruled in favour of Suklaxmi Shrestha stating that pneumonia was the cause of death even in the medical evidence filed by the insurer from the doctor involved in the treatment of the insured and the insured was seen for treatment only on August 12, 2019.
According to the order issued by the AUTHORITY on November 27, 2018, “Nepal Life Insurance Company is liable to pay the insured amount of both the policies and the amount to be as per the terms of the policy to the person entitled to the policy.” ’
The insurance committee had decided on the petition filed by Suklaxmi on May 1, 2018, after almost two years and four months.
