Consumer panel tells insurance firm to pay Rs 13.15 crore

NEW DELHI: The National Consumer Commission has rapped an insurance company for using a fire claim calculation formula which resulted in payment of a low compensation to a steel unit and directed it to pay Rs 13.15 crore, apart from interest, to the policy holder.

The apex consumer panel said "Asking surveyors to calculate the maximum depreciation and revise their calculation in our view, is not a healthy practice and will shake the faith of the insured in the insurance company."

An apex panel bench presided over by Justice K S Gupta and member P D Shenoy made these observations on a petition of Bhushan Steel and Stripes Ltd, which manufactures cold roll steel strips.

The company alleged that New India Assurance Corporation Limited did not pay it the due insured money despite for the loss duely endorsed by surveyors.

The consumer panel asked the insurance company to pay Rs 13.15 crore to the steel company, with an interest of 10 per cent for the loss suffered due to fire which broke out in their Shahibabad unit here 1998.

"The surveyors have finally assessed the amount payable after depreciation at Rs 13 crores. The insurance company is directed to pay this amount with 10 per cent per annum after two months from the date of the submission of the survey report to it," it said.

The fire had destroyed imported equipment fitted at the mill in Uttar Pradesh on 1998.
It rejected the insurance company's plea to dismiss the complaint as the steel firm changed its stand various time.

"Change of the stand taken by the company is a desperate act to save it from ruins and run the same and it is not a deliberate act to enrich itself," it said.