JUSTICE (RETD.) ALI AKBAR QURESHI, CHAIRMAN. Undeniable facts, not controverted by the respondent, that the petitioner purchased three policies, namely, Hifazat Plan, from the respondent company, the detail of which is given as below:- Sr.Policy No. Date of common- cementPremium per annumSum InsuredMaturity dateName of the Plan 1 168382 14.02.2011 54.470 871,478 14.02 2021Hifazat 2 UL201800010252535800415.08.2018 50.000 500:000 14.08.2058Hifazat 3 UL20180001025369004 15.08.2018 50,000 500,000 14.08.2058Hifazat Two policies bearing No.UL-2018000102525358004 and UL-20180001025369004 (mentioned at Sr.
Nos.2 and 3) in the above chart have been satisfied, whereas, only the policy No.168382 (at Sr. No.1) is in question.
2. The policy No.168382 was purchased by the petitioner, whereby the petitioner as per the policy documents is entitled to receive sum assured of Rs.8,71,478/- on its maturity date i.e. 14.02.2021. The petitioner, on attaining the maturity date of the policy in question, applied to the respondent/company on a printed form, namely, "Request Form for Policy Maturity Proceeds", duly provided by the respondent/ company to recover the sum assured. The respondent/company instead of paying the sum assured, transferred an amount of Rs.416,000/- on 26.03.2021 in her bank account. However, it is clarified here that, the petitioner paid total premium amounting to Rs.554,470/-. The petitioner, lastly prayed that the petitioner is entitled to receive the sum assured mentioned in the policy and not the surrendered value as alleged by the respondent/company.
3. The respondent/company contested the claim through written statement, wherein, it is not denied that the policy was sold by the respondent/company and purchased by the petitioner; although the petitioner paid the total premium amounting to Rs.554,470/-, but the petitioner is entitled to receive the surrender value and not the sum assured as mentioned in the policy documents. It is also mentioned in the written statement, that it is a unit link policy, duly signed by the petitioner, therefore, the petitioner is only entitled to receive the surrendered value instead of the maturity amount.
4. On 23.11.2022, the learned counsel for the parties to the case at the preliminary stage, argued the matter at some length and finally submitted at the bar, that since the interpretation of the contract/policy documents executed by the parties is involved and case can be decided without recording the evidence, therefore, both the learned counsel for the parties elected not to adduce any oral evidence, and the case was adjourned for final arguments and it was agreed to decide the case on the basis of interpretation of the policy documents, executed between the parties.
5. The only question which requires consideration, deliberation and appreciation "as to whether the petitioner as per the terms of the policy documents is entitled to receive the sum assured or the surrendered value on attaining the maturity of the policy". In order to appreciate the controversy, the policy documents executed by the parties were examined with the assistance of the learned counsel for the parties and found the schedule, which is as under:- Policy No. 168382 Issued date 17.02.2011 Commencement Date15.02.2011 Life assured Sum assured 800,000 Premium per year50,000 Termination date 14.02.2021 Term 10 years The respondent/company has not denied the contents of the policy schedule annexed with the policy documents and duly signed by the authorized officer of the respondent/company. A specific question was put to the learned counsel for the respondent as to whether there is any provision in the policy schedule of the respondent/company that the petitioner, on attaining the maturity of the policy is entitled to receive the surrendered value, the learned counsel instead of satisfying the query, submitted that there is a schedule annexed with the policy and the policy proceeds are to be paid according to the schedule. The schedule annexed with the policy was perused, which only speaks about the different amount, which are to be paid in different years to the policy holder on surrendering the policy, whereas, in this case, the petitioner is claiming the policy proceeds on the maturity of the policy, which is mentioned in the policy schedule. It is pertinent to mention here, that the respondent/company in the policy schedule while giving the commencement and termination dates of the policy has used the words in column "Termination date" and "Term" and under these column, "NA". The learned counsel for the respondent when confronted to this, submitted, that although the commencement and termination terms are used and mentioned in these columns, but these are not applicable as the word "NA" is already mentioned, which means "NOT APPLICABLE". It is highly deplorable and mischievous on the part of the respondent/company, as on one hand, the respondent/company is giving the termination date and period of the policy and on the other hand, has mentioned the word "NA" Not Applicable.
The extract of the policy schedule is reproduced here for ready reference:- New Jubilee Insurance Life POLICY SCHEDULE (Page 1 of 1)
Policy No. 168382 Issue Date 17/02/2011 Commencement Date 15/02/2011 Plan Name Secure Life PlanPolicy Owner Asma Qamar Life Assured Asma QamarAge Nearest Birthday 52 Years Admitted Event Assured AgainstDeath of the Life Assured Benefit Assured The benefit calculated in accordance with Condition 5 of Standard Policy Conditions applicable to Secure Life Plan issued by the Company.
Sum Assured Rs. 800,000 Premium Rs. 50,000 When are the Premium Payable: Yearly on 15th day of February.
Indexation Premium due and Sum Assured will be increased annually at the Policy Anniversary.
(See Condition 8 of the Standard Policy Conditions.)
100% of allocable premium is assigned to Managed Fund. GUARDIAN (S)
Name Relationship with Life Assured% Share Guardian's Name (if any)Relations hip with Nominee Zarish Qamar Daughter 100.00% Mirza Qamar U ZamanMother Policy Year I 2 3 4 5 6 Ad hoc Premium (if any) is allocated at 100% Allocation Percentage20%80% 90% 100% 100% 103% Benefit TypeSum Assured (Rs.)Premium (Rs.)Conditions AttachedCommen- cement DateTerminatio a DateTerm (yy)
Secure Life Plan800,000 50,000 Standard Policy Conditions15/02/2011N/A- N/A FIB (Monthly Benefit)6,667 Built in FIB 15/02/201114/02/2021 N/A Upon payment of the benefit Assured, the Policy would terminate without further value.
Issued of NEW JUBILEE INSURANCE COMPANY LIMITED (Registered and Supervised by Securities and Exchange Commission of Pakistan) at Karachi.
Proposal No: 525917 Item Type: NBU CONTRACTS Doc Type: PS
6. The policy documents and its contents were perused with the assistance of the learned counsel for the parties and found that those are misleading and deceptive and can easily mislead or deceive the policy holder/public at large. For instance, policy schedule (page 1 of 1) reproduced above is deceptive on the face it as in column "benefit type" it contained the commencement date of the secured life plane and the FIB (monthly benefit) but in the second column under the termination date "N/A" is mentioned without explaining the meanings of the same and if the meanings are not mentioned on the documents, how can an agent describe or explain this part of the policy schedule to the policy holder, who is even an educated person and if the policy purchaser is an illiterate, he would be at the mercy of the Insurance Company for the rest of the life.
As regard the other pages of the policy, almost all the pages are in English language using the smallest font of the typing, which can only be read with the help of magnifying glasses. Anyhow, a little portion of the documents is in Urdu language. Further the technical words used in the policy documents have not been explained. Normally, the insurance agent hired by the respondent company/Insurance Companies, have the qualifications of matric or at the most FA/Intermediate, and needless to mention, that it is difficult even for them to understand these documents, and resultantly, it is not possible for them to make the necessary disclosure and explain the packages to the policy holder, who is totally illiterate or having the qualifications of matric etc. By this way, it seems that the respondent company is totally ignoring the ratio of education in the country and interest of the policy holder by clearly violating the mandate and spirit of section 76 of the Insurance Ordinance, 2000 and adopted misleading and deceptive market conduct to sell the package and gained a substantial amount and could not be let escort-free.
7. The legislatures in order to check the deceptive marketing conduct has inserted section, 76 in the Ordinance, which for ready reference is reproduced as under:-
76. Insurer not to engage in misleading or deceptive conduct.--(1) An insurer shall not, in the course of its business as an insurer, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) The inclusion in an insurance policy of unusual terms tending to limit the liability of the insurer, without the express acknowledgement of the policy holder, shall constitute misleading or deceptive conduct. (3) Nothing contained in subsection (2) shall be taken as limiting by implication the generality of subsection (1). (4) Where a policy holder has relied upon any representations by an insurer or by an agent of an insurer which are incorrect in any material particular, inasmuch as it has the effect of misleading or deceiving the policy holder in entering into a policy, the policy holder shall be entitled to obtain compensation from the insurer for any loss suffered. (5) Notwithstanding the provisions of the foregoing subsection, the Commission shall also have the power to levy a fine on the insurer which shall be equal to the lesser of twice the loss determined to be suffered by the policy holder under the foregoing subsection and ten million rupees.
8. Needless to observe that the business of the insurance is based on the principle of "utmost good-faith" and the law requires each party to act towards other party in respect of any matter arising in relation to the insurance with utmost good-faith. In this case, the policy documents, although signed by the policy holder, but on the face of it, is deceptive and misleading or is likely to mislead or deceive because the technicalities used in these documents have neither been explained nor disclosed to the policy holder. It is pertinent to mention here, that it is nowhere claimed or mentioned by the respondent company while filing the written statement, that the respondent company or its agent fulfilled the responsibilities as required by the law, to explain and disclose the terms of the policy, including the hidden advantages and disadvantages, therefore, the respondent company has committed a criminal breach of trust and has failed to discharge its lawful obligation as enshrined in section 75 of the Insurance Ordinance, 2000. The word "utmost good faith" has been defined beautifully in relation to the insurance contract in the following manners in Google:-
1. Is a principle used in Insurance Contracts, legally obliging all parties to act honestly and not mislead or withhold critical information from one another?
2. Insurance agents must reveal critical details about the contract and its terms, while applicants are required to provide honest answers to all the questions fielded to them.
3. Also known by its Latin name uberrimae fidei, is a minimum standard, legally obliging all parties entering a contract to act honestly and not mislead or withhold critical information from one another, it applies to many everyday financial transactions and is one of the most fundamental doctrines in insurance law.
4. Requires all parties to reveal any information that could feasibly influence their decision to enter into a contract with one another. In the case of the insurance market, that means that the agent must reveal critical details about the contract and its terms.
5. Applicants, meanwhile, are legally obliged to present all material facts, as they are known, including precise details on whatever needs to be insured and if they have been refused insurance coverage in the past. This information is used by insurers to decide whether to insure the applicant and how much to charge.
Further it has been defined in Black's Law Dictionary as follow:- "The state of mind of a party to a contract who will freely and candidly disclose any information that might influence the other party's decision to enter into the contract. Also termed uberrima fides; uberrimae fidei".
9. The principle of "utmost good-faith" defined in the preceding paras, needless to mention, is basis and foundation of the contract including the insurance contract, mandates and requires that each party to a contract, to act towards the other party with utmost good-faith, instead of involving into technicalities and ambiguities of the contract, and further, drag party into endless cumbersome and unnecessary litigation, like the case in hand. In this case, unfortunately respondent/ company herself provided a printed form to the petitioner to apply for the maturity proceeds of the policy, but there-after, refused to abide by the terms of the policy and forced and compelled the petitioner to start the litigation and by this way, the respondent/company has completely failed to abide by the mandate of law, which is in any circumstance, is not approved in the corporate sector.
10. As regard the construction and drafting of the policy documents, section, 77 of the Ordinance, ibid is very much clear on this subject. The law requires (section 77) that while constructing or drafting the policy documents (Proposal Form and Claim Forms etc.), a reasonable effort should be made to use plane and simple language and provide instructions, where necessary on how the questions should be answered and comply with the law. It is necessary to reproduced section 77 of the Ordinance, ibid, here which mandates and binds the insurer not to refuse the payment of the claim on the ground of non-disclosure or non-compliance by the policy holder, if the insurer fails to comply with the requirements of section 77, and where it can reasonably be determined that the non-compliance or non-disclosure resulted from inadequate understanding by the policy holder of the language of the policy. Needless to observe, that the construction of ambiguities of the policy documents will go in favour of the policy holder.
77. Construction of ambiguities in favour of policy holder.---(1) Any ambiguity in a contract of insurance shall not be capable of being construed in a manner which is contrary to the interests of the policy holder. (2) An insurer or an insurance intermediary shall: (a) when drafting policy documentation, make reasonable efforts to use plain language; and (b) when drafting proposal forms and claim forms, make reasonable efforts to ensure that it identifies in those documents the usual information the insurer ordinarily requires to be disclosed; and that those documents are in plain language and provide instructions where necessary on how the questions should be answered; and comply with the law. (3) Failure to comply with foregoing subsections shall be an absolute bar and shall preclude an insurer from refusing payment of a claim on grounds of non- compliance or non-disclosure by the policy holder, where it may reasonably be determined that the non-compliance or non-disclosure resulted from inadequate understanding by the policy holder of the language of the policy, proposal or claim form as a result of such failure.
11. As regards the interpretation of the provisions of the contract (policy documents) it is well established principle of law that the same is to be construed and interpreted objectively as observed in 2011 PLC (C.S.) 1579 Sindh in case titled Muhammad Shahnawaz and 44 others v.
Karachi Electric Supply Company and others, which is as under:- "Finally, the provisions of the contract are to be construed and interpreted objectively. This is absolutely fundamental. Thus, in Sirius International Insurance Co. v. FAI General Insurance Ltd.
(2004) UKKL 54; (2005) 1 All ER 191, it was observed as follows:- "The aim of the inquiry is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language. The inquiry is objective: the question is what a reasonable person, circumstanced as the actual parties were, would have understood the parties to have meant by the specific language. The answer to that question is to be gathered from the text under consideration and its relevant contextual scene".
Further held:- "Only the clearest possible language could, if at all, achieve such a result. A contractual power of this nature should also be construed contra proferentem, i.e., any ambiguity or doubt in the scope of the power should be construed against the employer and in favour of the employee".
12. The Hon'ble Supreme Court of Pakistan while interpreting the principle of contra-proferentem in PLD 2021 SC 906 titled "Universal Insurance Company and another v. Karim Gul and another" has beautifully observed 'as under:- "It can safely be concluded that the contract (notwithstanding its typographical errors) was the creation of the appellant. It is the entity in the insurance business and can be taken to know the sense in which the term "total loss" is used in the industry. Keeping the relevant background facts in mind (as emerging from the evidence. led at the trial) in our view a reasonable person considering the contract objectively would conclude that the term was used in the contract in a technical sense. The appellant's case is that the sense was of "actual" total loss, i.e., the thing sold was mere wreckage. In our view, there is a certain ambiguity as to in which of the two technical senses the words were used. Now, a well-known principle of interpretation of contracts is the contra proferentem rule: "when there is a doubt about the meaning of a contract, the words will be construed against the person who put them forward" (Lewison, op. city, pg. 360). It has been held judicially, in the (UK) Court of Appeal that the rule is "a principle not only of law but of justice"
(Association of British Travel Agents Ltd., v. British Airways Pic (2000) 2 All ER (Comm) 24, (200)
2 Lloyd's LR 209), and in the Supreme Court of Canada that "whoever holds the pen creates the ambiguity and must live with the consequences" (Co-operators Life Insurance Co v. Gibbons (2009) 3 SCR 605, 2009 SCC 59)".
13. There are ambiguities and technical language, which has not been explained in simple words so that it can be explained and disclose to the policy holder. Further, there is nowhere mentioned in the policy documents that at the time of selling the policy to an illiterate person or having little knowledge of language or technicalities of the policy documents, advise of any family member is/was available to the policy holder to understand the technicalities, therefore, the policy holder is entitled to take the benefits of these ambiguities created by the respondent/company.
14. Learned counsel for the petitioner referred a printed form; namely "Request Form for Policy Maturity Proceeds", issued by the respondent whereupon, the policy holder is required to make a request for maturity proceeds. It is not denied that the petitioner duly applied to the respondent/company for maturity proceeds on a printed form, provided by the respondent/company. In this printed form made by the respondent to pay policy proceeds on the maturity of the policy on its submission by the Policy Holder, it is nowhere mentioned that on maturity of the policy, the policy holder will receive surrender value instead of the sum assured.
When it was confronted to the learned counsel for the respondent/company, the learned counsel has no answer, but repeated his arguments that it is a unit link policy and even on maturity, the policy holder will be entitled to receive the surrendered value. The Request Form for Policy Maturity Proceeds is reproduced hereunder for ready reference:- Jubillee Life Insurance REQUEST FORM FOR POLICY MATURITY PROCEEDS IMPORTANT INSTRUCTIONS FOR FORM COMPLETION
1. Complete the form in all respects; answer all questions with a single pen.
2. While in Bold legible script within the space provided for each option.
3. If an opinion is not selected, please neatly write Not Applicable".
4. Do not over write, mutilate, scribble, cancel or delete and do not use abbreviation, dots, crosses and dashes.
5. Use Original Form and sign as per signatures use affixed on proposal form, with date.
6. Attach all bank statements of policy owner for last two (2) years including bank statement of policy owner from where premium has been paid by policy owner, valid documents supporting the profession/occupation and gross annual income of policy owner.
7. Attach attested photocopies of computerized National identity Cards of policy owner, Life Assured and Beneficiary.
8. Attach Original Policy Document.
9. Additional information/documents may be required if needed.
10. In case someone else (Beneficial Owner) has been supporting the policy owner financially in the premium payment then submit all documents in respect of beneficial owner too as are applicable to policy owner, as mentioned in instruction No.6 above.
Policy No.168382, Policy Owner Name Asima Qamar, Policy Owner place of Residence Lahore, Policy Owner Gross Annual Income Rs.150,000, Policy Owner Profession Retd Teacher, Policy Maturity Date 14-02-2021, Maturity Proceeds (Cash Value) ____ Life Assured Name Asima Qamar. Beneficiary Name Zarrish Qamar.
DECLARATION OF POLICY OWNER I ASIMA QAMAR WIFE OF MIRZA QAMAR UZ ZAMAN hereby declare that I am the sole policy owner of the Policy No.168382 (Policy) and hereby apply by Jubilee life Insurance Company Limited to pay maturity proceeds in my favour as per the standard policy condition of the policy documents. I further acknowledge and agree that the payment of the maturity proceeds after all applicable deductions as per the law of Pakistan will discharge Jubilee Life Insurance Company Limited from all liabilities and claims arising under this Policy. I also hereby certify and declare that I am wholly and solely entitled to the maturity proceeds under the Policy and solemnly declare that the said Policy has not be assigned or transferred to anyone else nor does any other person have rights to the said Policy or Maturity Proceeds I, herewith, return original Policy document to Jubilee Life Insurance Company Limited. I solemnly declare and agree that in case of any misrepresentation from myself, Jubilee Life insurance Company Limited reserved every right to recover damages, claim compensation and initial criminal or civil legal proceedings against me.
ZAKAT SECTION Zakat Deduction Yes/No. (It No., please attach affidavit) Not Eligible (For Non-Muslim)
NOTE 1. In the event of the payment of Maturity proceeds, 2.5% of the amount payable will be deducted as Zakat and paid over to the appropriate authority.
2. To claim on exemption from Zakat deduction, on appropriate affidavit must be submitted with this form.
PAYMENT SECTION Deed transfer into Bank Account from where Premium has been paid by Policy Owner.
Via Pay order/Cheque Name of Payee (Policy Owner) ASIMA QAMAR Account Title ASIMA QAMAR Bank Name HABIB BANK LTD. Wapda Town Branch Lahore Bank Account No. 0012837901135301 NOTE: Maturity Proceeds will be directly transferred by Jubilee Life Insurance Company Limited to the Bank Account of Policy Owner from where Premium has been paid by Policy Owner. Kindly provide herewith the details of Bank Account from where Premium has been paid by Policy Owner in case this option is not opted by Policy Owner then valid reason along with supporting documents have to be provided by Policy Owner.
VERIFICATION BY AUTHORIZED OFFICIAL OF THE CONCERNED BANK We do hereby verify the above particulars and signature of our account holder.
Officer __________ Contract No. _____ Signature and Stamp _____________ Policy Owner's Signature _____ Guardian Name Mirza Qamar uz Zaman Life Assured's Signature _____ Guardian's Signature Beneficiary's Signature ______ Signature of Witness No.1 Mirza Qamar uz Zaman Signed on (Date) 22-02-2021 Name of Witness No.1 Mirza Qamar uz Zaman Policy Owner's CHIC # 36501-8125601-0 CNIC Witness No.1. 36501-2322142-3 Mobile No.0336-4285244 Signature of Witness No.2 Email Address __________ Name of Witness No.2 Maham Qamar CNIC # of Witness No.2 36501-9776333-4
15. During the course of arguments, it was repeatedly argued by the learned counsel for the petitioner that at the time of selling the product, the insurance companies including the respondent/company only show or display a recorded video of 2 or 3 minutes to the purchaser of the policy irrespective of the fact whether the purchaser is educated or quite illiterate person. It too was confronted to the learned counsel for the respondent, who candidly conceded to this fact and also admitted that no record is maintained of the questions if put by the purchaser of the policy at that moments.
16. In order to understand this aspect of the matter, which in fact relates to the public at large, a director of the SECP, Regulator of the insurance companies, Mr. Jabran was summoned who ably assisted and also submitted his report. The said officer not only conceded to the fact at the bar, but also mentioned in his report that only a video of 2 or 3 minutes is being shown to the purchaser of the policy and the record of the questions put by the Policy Holder is not being maintained. The relevant para of the report is submitted by the said officer is reproduced as under:- "However, keeping in view the intent of the learned Tribunal of having video recording, a solution can be video recording of sales recap in which the agent stating clearly the terms of the insurance policy being purchased, the risk inherent with the underlying insurance policy, summary of need analysis, fund suitability analysis, free look period and all the necessary disclosures required to be made by law under Unit Linked Product and Fund Rules, 2015 and the Corporate Insurance Agents Regulations, 2020. The insurance agent shall require from the prospect regarding his understanding as to what he is purchasing and that he shall allow the prospect to pose questions before him that he wishes to enquire about his policy".
Almost in all cases, pending before this Tribunal, the policy holder are complaining that at the time of selling the policy, the purchasers are not being provided the complete information regarding the nature of the policy rather the wrong verbal information, which are not mentioned in anywhere are being provided. Sometime the agent solicit the hope confidently to the policy holder that the amount would be doubled in ten years. It is pertinent to mention here that the policies are not only buying by the educated persons but also illiterate, therefore, it was agreed by the representative of the SECP that all the representatives of the insurance companies should prepare/make live video disclosing the complete information regarding the policy package by the representative/agent and the questions/queries put by the purchaser, therefore, in view of this, in future all the companies, as agreed by the SECP, shall make a live video of the conversation of the representative/agent of the insurance companies and the purchaser of the policy and the record of the same shall be maintained by the insurance companies, so that the purchaser could not take any such plea in future and same could be summoned by the Tribunal, if any such dispute arises.
17. Since, it has been proved from the contents of the policy and the arguments of the learned counsel for the parties, that the petitioner paid the total premium amount of Rs.557,470/-, the term of the policy was matured on 14.02.2021 and the petitioner applied on the printed form of the respondent/company on attaining the maturity of the policy to the company on 22.02.2021, therefore, the petitioner is entitled to receive the sum assured amount of Rs.800,000/- along with liquidated damages provided under section 118 of the Insurance Ordinance, 2000. The respondent/company knowingly that the petitioner is entitled to the sum assured as per the terms of the policy documents, but unnecessarily delayed the matter for a long time, drag the petitioner into the litigation which in any case is unlikely to a commercial organization, therefore, this petition is allowed, subject to costs of Rs.50,000/-, which shall be paid by the respondent/company to the petitioner. The respondent/ company is directed to submit the cheque of remaining sum assured along with liquidated damages plus costs of Rs.50,000/- excluding the amount of Rs.416,000/- already transferred in the account of the petitioner/insured.
17(sic.) Before parting with this judgment, the Registrar of this Tribunal is directed to send a copy of the judgment to the Chairman SECPI the regulator of the insurance companies, to convey the following instructions/directions to the insurance companies:- I. From 30th September, 2023 All the insurance companies shall. draft the policy documents in English as well as in Urdu language giving the explanations of the legal language and technicalities.
II. The font of the letters of the policy documents should be visible and easily readable.
III. From 30th September, 2023, all the insurance companies shall ensure that the agent/representatives/sales staff of the company will make live video of the complete transaction of selling the policy, wherein, the agent in a very simple language will explained and disclose the package in detail and answer the queries/questions raised by the policy purchaser.
IV. The record of the video prepared by the agent/sale staff shall be maintained by the company, so that the same could be summoned (if required).