Human Rights Protection Foundation’ President Ravindranath Shanbhag recently mentioned about order of the Consumer Court of Chikkamagaluru directing LIC to repay the premium amount embezzled by its agents.
LIC agents Devaraj and Shobha Rani were arrested but HRPF expressed its concern about non-payment to policyholders. The policy holders had written to Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley to direct the LIC to follow the court order. “We urge the LIC not to delay the delivery of justice by filing an appeal against this court order,” said Dr. Shanbhag.
Micro insurance policies under the Jeevan Madhur scheme for people below poverty line were issued through three NGOs (also called micro insurance agents) from 2009-10 to 2014.These NGOs appointed sub-agents to collect policies/premium in rural areas and they got policies issued to economically vulnerable sections, regularly collected premium and remitted in the name of LIC with the NGOs.
Some people lodged claims with LIC for some risk covered by the policy. However, LIC rejected these claims on the grounds that the policies had lapsed for non-payment of premium.
The cash paid by the sub-agents for transmission to LIC was pocketed by the micro insurance agents.
These sub-agents were forced to refund the amount to policy holders ranging from Rs. 1 lakh to Rs. 3 lakh.