Not many people in this country buying insurance plans are aware that the insurance companies have a policy of not covering death due to terrorism. This has been done in the last two decades with the rise of threat of terrorism. It seems the “exclusion clause” or what you may call the fine print is not expressly conveyed to the client at the time they are sold the policy. In some cases, the scope of this exclusion clause is so wide that it covers murder of any kind.
This is significant in a country like Pakistan where, according to official figures presented in the National Assembly, more than 50,000 people have died in acts of terrorism in the past few years. Some organisations term this number above 80,000 while tens of thousands have suffered injuries. Protection of life is therefore a genuine concern of a person who has to support a family.
Yet the insurance companies seem to have devised a policy of not including such deaths in their claim benefit category. Most clients buy insurance plans and pay premiums because of security concerns and to protect their family. Generally, they are oblivious to the fact that the biggest security threat — terrorism — is not even considered by the company. More people want to get covered for their lives and properties because of escalating violence, adding to the companies’ business while the companies seem afraid to offer terrorism cover, fearing a big chunk going in claim benefits out of their growing business.
Three years ago, on February 18, the only breadwinner of his family Dr Syed Ali Haider, a professor of ophthalmology at a medical school in Lahore, was shot dead in broad daylight along with his 11-year-old son Murtaza Haider. His crime was that he was a high profile doctor belonging to a particular sect.
Two years before this tragedy, Dr Haider had bought an insurance policy from a local bank. The bank runs that policy with the partnership of a nationwide prominent insurance group. But when Fatima Haider, the widow of Dr Haider, filed a claim under the policy through the bank, the company plainly wrote to the claimant that it does not fall in any claim category.
It stated that the policy does not entertain any claim related to target killing/murder. After ‘thoroughly scrutinising’ the death claim of Dr Haider’s widow, the company came to the conclusion that according to exclusion clause of the said policy the claim has no standing. The exclusion clause stipulates “Insurance cover under this policy does not cover death of client resulting directly/indirectly; internationally or locally (which the letter described as ‘un-internationally’) due to pre-meditated, indiscriminate, spontaneous, random or targeted murder or any malicious or criminal act or terrorism. Therefore, no claim benefit is payable”.
Fatima Haider has been struggling for her claim with the company for the past several months. The company has denied the request every time she’s approached it, without explaining why murder or death due to an act of terrorism or bomb blast does not stand for any claim.
Death of a breadwinner of a family brings immense hardships, misfortune and misery to a family. An untimely and accidental death in an act of terrorism further adds to these miseries.
“At the moment, there is hardly any insurance company that considers deaths in acts of terrorism as accidental death. Only a few top insurance companies are providing selective terrorism cover, but at high premiums. However, every company pays claim as per the natural death category,” says a general manager of another reputed insurance company, showing surprise at the fact that Dr Haider’s claim was not included in the ‘natural’ death category.
Some of the insurance companies do not consider this type of death as ‘accidental’ because then they have to pay more money to the client.
“If a client of an insurance company is killed or targeted on any sectarian ground or dies in a bomb blast, it is considered ‘natural’ death but if one dies in road accident then it is called accidental death,” an area manager of the same insurance company that has denied claim to a family of victim of terrorism tells TNS, asking not to be named.
“Sudden death in an act of terrorism or target killing is more painful and this is the time when the family needs an insurance claim benefit. Such death is far more painful than a road accident and this loss is not just mine but of the country that lost a precious and competent eye specialist who was serving the state whole-heartedly and was a national asset,” says the widow of Dr Haider.
Muhammad Ashfaq, a senior policy salesman of a reputed insurance company, says murder was treated as accidental death before 2002. “The policy changed after 2002 and now murder or death in a terrorism incident is treated as natural death for claim benefit purposes,” he says.
Ashfaq recalls a recent example among many in which a local Shia cleric bought the insurance policy of the company. The company asked the client to sign a separate document that stated that if he died in any sectarian incident or in any blast or attack on any religious place like sitting in a Shia gathering (Majlis), his family would not get the benefits of accidental death. The client, at last, agreed to the condition.
“Insurance companies in Pakistan are actually re-insured by international companies. Most of the claim benefits are paid through them. They think of Pakistan as a hub of terrorism. Considering the law and order situation here, they have included the condition of not including murder or death due to terrorism in accident category to earn more and pay less,” says the general manager of a prominent insurance company.
He concurs with Ashfaq. “This policy came some years ago in the face of escalating violence. Earlier on, murder was considered accidental death,” he recalls. He says it is the Securities and Exchange Commission of Pakistan (SECP) that approves insurance companies’ policies and regulates this sector. If the government wants, it can force the company to change the policy through SECP.
Even after a week, the SECP did not respond to TNS question as to why deaths in acts of terrorism are not considered accidental and claim benefits are not paid that way. An official of SECP, asking not to be named, said such questions require time. He admits that there are many complaints from clients regarding denial or reduced claim benefits. “Particularly, complaints against the company involved in the above case are large in number.”
“When the insurance plans are sold, the client generally assumes that his family would benefit after his death against the paid premium. The insurance companies’ agents do not describe the clauses clearly,” says Fatima Haider. “Where should the families of terror victims go when they come to know about such trickiness?”
She asks the state and the government to be sympathetic to such cases and hold insurance companies accountable for such tricks. It is tragic that the company is denying claim benefit even against ‘natural’ death despite the fact that the agents are selling them without telling the truth. She has appealed to the prime minister and chief of the army staff to seriously look into the situation.