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Court offers shield to life insurance agents
Published on 24 May. 2011 1:08 AM IST
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A life insurance company cannot terminate the services of its agent on the grounds of suppression of facts related to a policy seeker unless he or she is involved in a conspiracy to defraud the firm, the Gujarat High Court has ruled. The bench of Chief Justice S.J. Mukhopadhaya and Justice J.B. Pardiwala ruled so while allowing a petition filed by penalised Life Insurance Corporation (LIC) of India agent Geetaben Modi.
Modi challenged the termination of her agency and forfeiture of the renewal commission by the LIC on the allegation that she suppressed the fact that customer S.B. Gorange was suffering from cancer and proposed his insurance.
The court observed that the facts of the case did not show that there was any meeting of minds or any conspiracy hatched for the purpose of defrauding the corporation.
“We hold that the respondent corporation has dealt with the matter in a very slipshod manner,” said the chief justice in an order made available Monday.
“The manner in which the corporation has acted and the manner in which decisions have been taken by all authorities to terminate the agency and order forfeiture of the renewal commissions leaves us with no other option but to quash and set aside orders passed by corporation authorities,” the judges said.
Modi claimed that she was unaware of the fact that Gorange was suffering from cancer. She said before insuring him, she arranged for his medical examination by an approved medical examiner. The examiner certified that Gorange was quite healthy. Other medical reports also showed that Gorange was not suffering from any disease.
The petitioner said that she took care in verifying the details from Gorange and his family and inquired if he was undergoing any treatment for any disease or had been admitted to hospital. Modi said she inquired with close relatives of Gorange, including his mother and brother, and all of them said that the person being insured had no ailment and was not hospitalised at any point of time.
After the internal proceedings within the corporation, which terminated her agency and refused to give renewal commission, Modi challenged the same in the high court. A single judge bench, however, dismissed her petition leading to the plea before the division bench.

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