NCDRC Slams ICICI in Insurance Scam, Orders To Pay ₹2.99 Cr To Widow.

Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098

The NCDRC has ordered ICICI Lombard to pay ₹2.99 crore to a Mumbai widow, condemning the insurer’s rejection of a home loan insurance claim on ambiguous grounds. The Sprouts News SIT highlights this as a major case of mis-selling, exposing serious lapses in transparency, documentation, and ethical financial practices.

In a landmark judgment, the National Consumer Disputes Redressal Commission (NCDRC) has directed ICICI Lombard General Insurance Company Ltd to pay ₹2.99 crore along with interest to a Mumbai-based widow. The commission held that the insurer had unfairly rejected her claim on technical and ambiguous grounds. Additionally, ICICI Bank Ltd has been ordered to return the original property documents of the complainant’s home, failing which the lender will be liable to pay a penalty of ₹5,000 per day .

In September 2014, Hemamalini Darbha and her late husband, Gangadhar Darbha, secured a home loan of ₹3.22 crore from ICICI Bank. During the loan process, they were informed by the bank’s branch manager that, as ‘high-value customers,’ they would receive a complimentary insurance cover for the full loan amount from ICICI Lombard. A representative from ICICI Lombard obtained Mr. Darbha’s signature on blank forms, assuring that the necessary details would be extracted from the loan application. The sanctioned loan amount included ₹22.10 lakh as an insurance premium, which the Darbhas believed was complimentary .

Tragically, on 11 September 2015, Mr. Darbha suffered a fatal cerebrovascular accident. Following his death, Ms. Darbha submitted an insurance claim, expecting the sum assured of ₹2.99 crore. Despite her full cooperation, including providing her husband’s medical history and authorizing hospital record releases, the insurance company repudiated the claim. The rejection was based on alleged non-disclosure of pre-existing medical conditions such as diabetes, hypertension, kidney disease, and a history of dialysis .

Ms. Darbha contended that no such disclosures were ever requested. She stated that her husband was made to sign blank forms within the ICICI Bank branch and was told that the necessary details would be filled in using their loan application data. She further asserted that they were never provided with the policy booklet nor made aware of the terms and exclusions of the insurance plan .

The NCDRC bench, comprising Presiding Member Subhash Chandra and Member AVM (Retd) J Rajendra, observed several discrepancies and service deficiencies on the part of the insurance company and the bank. It noted that the proposal form was poorly designed, with small fonts, vague instructions, and no clear space for answering questions about medical history. Citing the contra proferentem rule, the bench held that such ambiguity must be interpreted against the insurer. It further noted that ICICI Lombard never insisted on a medical examination before issuing a policy with a high sum assured and instead relied solely on the vague proposal form allegedly filled by the deceased .

The commission directed ICICI Lombard to pay the complainant the amount due under the home-loan insurance policy along with simple interest of 7% per annum from the date of repudiation of the claim on 8 February 2016 till the date of final payment, within a period of one month from the date of the order. In the event of delay, the interest rate applicable shall be at 10% per annum. ICICI Bank was directed to return all the original documents of the flat to the complainant within a period of one month from the date of the order. In the event of delay, the lender will pay costs of ₹5,000 per day to the complainant. Additionally, ICICI Lombard was directed to pay the complainant ₹50,000 as the cost of litigation .

This case is not isolated. In another instance, the NCDRC justified the verdict of the Delhi State Commission, which ordered ICICI Lombard to pay ₹75 lakh with interest to a complainant, holding that the insurer had unfairly denied the claim on grounds of non-disclosure of pre-existing conditions. The commission emphasized that common lifestyle diseases like diabetes cannot be grounds for claim repudiation if they are not directly linked to the cause of death.

Furthermore, the Insurance Regulatory and Development Authority of India (IRDAI) has acknowledged a series of complaints from policyholders regarding the mis-selling of insurance policies by banks and other NBFCs. These complaints often pertain to instances where policies are forcibly sold or mis-sold by banks/NBFCs, especially during the process of availing housing or other loans .

The Sprouts News Special Investigation Team (SIT) views this judgment as a significant step towards ensuring accountability in the financial sector. The case underscores the importance