In a landmark decision, the National Consumer Disputes Redressal Commission (NCDRC) has ordered the Agricultural Insurance Company of India Limited to refund premiums paid by 61 farmers from Kurnool, Andhra Pradesh. The directive follows the company’s failure to provide comprehensive details of a crop insurance scheme, causing significant distress among the farmers.
Presiding Member Binoy Kumar highlighted that the pamphlet distributed by the insurance company was inadequate, containing limited and incorrect information about the scheme. This lack of transparency led the farmers to unknowingly enter into an insurance agreement without full understanding.
The Commission mandated the insurance company to compensate each farmer with ₹40,000 for mental agony, harassment, and litigation costs. The dispute dates back to 2012 when adverse weather conditions caused severe damage to the mango crops. The insurance company had rejected the farmers’ claims, citing the absence of high-speed winds as per the policy conditions.
The ruling underscored the company’s deficiency in service due to non-disclosure of complete scheme details. The Commission emphasized the importance of explaining the intricate and technical aspects of such schemes to farmers before collecting premiums.
The NCDRC noted that while the State’s Department of Horticulture and Agriculture was responsible for publicizing the scheme, the primary duty of disclosure rested with the insurance company, which collected the premiums. The decision clarified that the insurance company’s responsibility was paramount in informing the farmers.
The mango crops were insured under the Weather Based Crop Insurance Scheme (WBCIS) launched by the Government of India in 2010. The Andhra Pradesh government had notified Kurnool and other districts for this scheme in 2012. Despite the farmers paying their premiums, adverse weather led to significant crop losses, prompting them to seek redressal through the Kurnool District Consumer Disputes Redressal Forum.
Initially, the District Forum found the insurance company deficient in service and ordered compensation based on 70 percent of the insured amount. However, this decision was overturned by the Andhra Pradesh State Consumer Disputes Redressal Commission, leading the farmers to escalate the matter to the NCDRC.
The Commission’s decision reinforces the need for transparency and accountability in insurance practices, ensuring that farmers are fully informed and protected.
