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R. Desikan

Two identical cases regarding household and transportation insurance have come to my attention. Mallika, till recently living in Chennai, shifted to Hyderabad, when her husband took up a job there. To transport their household goods, they en gaged the services of a company, after negotiating and finalising the rates. The company asked Mallika to pay insurance to cover the risk of transportation, so that in case of any damage during transit, the insurance company would compensa te. The insurance premium thus collected was 3 per cent of the total value of the goods. This was included in the invoice prepared by the company and Mallika paid the total amount.

Unfortunately, some of the goods were damaged. When Mallika called the Hyderabad office and claimed repair charges, they dodged the claim. Following this, she wrote to a newspaper, which published her story much to the chargin of the transport company. It, however, agreed to pay the amount. But, the payment has not been made till date. Of course, Mallika should take up this matter in the consumer forum. But that is not the point I wish to make here.

When the transport company collected the insurance premium from Mallika or any one else for that matter, they should have

* either paid the money to the insurance company and given the policy to Mallika, or

* included Mallika's premium, in an omnibus policy in case insurance companies offered one. Neither was done.

What could have probably happened is that the transport company collected the premium from Mallika and several others who sent their goods in that lorry and did not pay the premium to the insurance company. This is where a consumer h as been irresponsible. Is it not logical to think that if a consumer pays money for a purpose in this case, transport insurance, the consumer must demand the insurance policy from the insurance company, or some document to make the insuranc e company accept a liability? Mallika is not in possession of any such papers from the insurance company. And, even if consumers collect one, most of them fail to understand the contents of the documents. They do not raise doubts and clarify certa in clauses or statements in such documents.

Whose responsibility is it to educate consumers? I would say that the responsibility lies with insurance companies. When I enquired about this incident, the insurance company executives seemed to be aware of such practices and also had not done much t o inform or educate consumers.

Another act of cheating has taken place in this case. The invoice given to Mallika by the transport company puts carriage insurance at 3 per cent. It has been printed on the invoice and therefore I can take it that they collect 3 per cent from all custom ers. This is illegal because the insurance company charges only 1.5 per cent on household good transportation. On special electronic equipment they charge 15 paise per Rs 100. Therefore, the transport company has done two things, which a re wrong.

* Collecting 3 per cent insurance when they should have collected only 1.5 per cent.

* Not issuing a policy from the insurance company if Mallika's insurance was the only one in this transportation, or a cover certificate from the insurance company.

In the other case, a well-known hire-purchase company, specialising in household articles, sold a television set under a take-now-and-pay-later scheme. They also collected an insurance premium, which covered theft, loss and breakage or failu re of the television set. This particular set was stolen.

When the buyer complanied to the company, they raised several objections. The buyer filed a case in the consumer forum. The decision was appealed against. The case was brought before Justice Khader, the then President of the State Consumer Disputes Redressal Commission and he asked the company to produce the insurance policy. The company could not. Justice Khader then called for the company's account books to be brought to the commission. As we were the complainant's r epresentative, SMN Consumer Protection Council's auditor was asked to examine all books. We found that the company had merely collected the premium from each customer but never paid the money to the insurance company.

Who is responsible? I would say the primary responsibility falls on the shoulders of the consumer. Each consumer must make sure that all the documentation is correct.

As the Insurance Regulatory and Development Authority (IRDA) has been effectively functioning now, it should look into these cases and find a way to protect consumers or enforce the law in such a way that such malpractices are removed. The IRDA should also plan a series of educational campaigns to inform consumers of their responsibilities and rights.

(The author is former Chairman, Federation of Consumer Organisations, Tamil Nadu. He can be reached at rdesikan@vsnl.com)