President directs insurance company to refund Rs 100,000 with profit


Islamabad, 11 January 2024: President Dr Arif Alvi has directed EFU Life Assurance Ltd to refund Rs 100,000 along with profit to a poor lady who had been misled to obtain the insurance policy. Ms Zubaida Begum had obtained an amount of Rs 100,000 by participating in a local “committee” and intended to deposit the amount in her bank account, but she was fraudulently issued an insurance policy at the bank. Being a poor lady, when she expressed her inability to pay an annual premium of Rs 100,000 and asked for a refund of her deposit, she was told that she’d only be refunded an amount of Rs 40,000, being the prevailing cash value of the policy.

Feeling aggrieved, she approached the Federal Insurance Ombudsman (FIO) but her grievance was not addressed. Later, she filed a representation with the President against the decision of FIO.

The President personally heard the case of the aggrieved lady, and after going through the record, decided the matter in her favour. In his decision, he observed that the complainant was entitled at least to the refund of the principal amount as her claim was just and fair. He added that the mis-selling of the policy to a poor lady who never opted to purchase the policy in the first place and thereafter the denial of the refund of the deposited premium amount by the company constituted maladministration.

The President noted that FIO had directed the insurance company to refund Rs 40,000 to the woman, without appreciating the fact that an amount of Rs 60,000 was remaining to be paid by the company. He said that as per Insurance Ordinance 2000, FIO was to ensure the protection of the interests of insurance policyholders, and non-refund of even the deposited amount by the insurance company was a sheer violation of the spirit of the Ordinance. He stated that FIO had failed to follow the spirit of the Ordinance and had not realized that Rs 100,000 had been kept by the company since 2020, and they must also have earned considerable profit on it by investing it.

The President wrote that the equitable principle of enrichment envisaged that no one should unjustly enrich themselves at the expense of others. He added that it would be unjust to deprive the lady of her share in respect of the profit earned on her money.

The President, therefore, accepted the representation of Ms Zubaida Begum and directed EFU Life Assurance to refund the full amount of Rs 100,000 with profit to the complainant within 30 days of the order.