Expired cover: NICL sued for refusing to pay LDA Plaza claim

Insurer says policy had expired on May 2.

LAHORE:

Additional District and Sessions Judge Nisar Ahmed on Tuesday issued notices to the National Insurance Company Limited (NICL) and the Securities and Exchange Commission of Pakistan on an application filed by the Lahore Development Authority (LDA) seeking an insurance claim of Rs15.24 billion.

The petitioner (LDA) had contended that on May 9, 2013, a fire broke at the LDA Plaza. LDA said the applicant had approached the NICL to seek payment of his claim.

LDA said the company had refused to entertain the claim citing expiry of fire policy on May 2, 2013.

The petition said that LDA had been regularly renewing the insurance policy since 1985 by adopting the codal formalities through cross cheques. It said the policy was renewed by NICL even if the payments were two to 82 days late. It is pertinent to mention that the policy was renewed with effect from May 2 and not from the date of receipt of the payment.

The petitioner said LDA had received a notice dated April 19, 2013 from NICL followed by a reminder dated May 2, 2013 seeking Rs260,537 to renew the insurance policy.



It said that had a tragic incident not taken place, the payment would have been made just like the previous 27 years. It said that the fire broke out on May 9 when the payment file was under process and was lying with the audit director on the 9th floor of the building.

The petitioner said the file containing the record since 2000 was also destroyed in the incident.

In response to the letter dated April 19, 2013 and May 2, 2013 and in view of the previous practices, the respondent processed the case afresh and approached the respondent for renewal of premium of fire insurance policy with a cheque for Rs260,537.

The petition said the NICL had refused to accept the cheque and said that at this point, the company could not renew the insurance policy unless the building was reinstated or brought back to its pre-loss condition.

On May 20 the petitioner wrote to the respondent seeking compensation for the fire. The respondent replied: “We regret the fire incident on May 9 but the loss is not entertain-able as the fire policy had expired on May 2, 2013.”

The applicant told the court that the respondent had never terminated the contract/policy. It said that was common for insurance companies to issue a 30 days notice ahead of the expiry date but this practice was not observed.

The petitioner prayed the court to pass a decree in favour of the applicant declaring the refusal of the claim and continuation of policy illegal, and based upon malafide and vested interests.

It said a recovery of Rs15.24 billion with 20 per cent interest be made from the date of the application till the time the claim was realised.

It further said that the Securities and Exchange Commission be directed to exercise their powers under Section 63 of the ordinance of 2000 to direct the respondent to stop entering new insurance contracts unless its lawful claim was satisfied.

Published in The Express Tribune, June 5^th, 2013.