Worksmen Compensation Act & Medical Insurance

Dear Seniors,
My company is providing Group Medical insurance & Group Personal Accident benefit for employee who are not covered under Employee State Insurance.
My Financial auditor advised me to not to renew the medical benefit for coming year just because Company Salary account bank is providing us insurance for employee.
Kindly advise me on this.

Dear Mubashira
The Banks which are issuing the Visa Cards are covering for Rs.1,00,000/- for accidents. It is as like term plan. But normally the companies are covering their employees and families for accidental death, injury, and even for medical coverage and the compensation part.
For getting the benefits from the Visa is not that much easy, in times the employee may not get. Hence do not discontinue the existing policies.

Please explain your management about the tendency of the employees in the Bank. They will simply pass on the responsibility that the claim has to be processed by the Visa and not by the Bank. But the pressure will fall on the company from the Labour Office/factory inspector. The company should bear the cost of medical and compensation to be paid. Instead of suffering in lot the medical policy will be ideal to have cost control.
Till now there is no record that any bank paid the compensation to the victim/family of victim. But daily we are hearing so many accident news. These are all for eyewash and in practical you will not get any compensation from any bank.

Dear MUBASHIRA,
What is advised is right. I would like to add that to escape liability under Employees Compensation Act, your policies should be under the said Act and policies extended by Credit Card or some banks like SBI, that are personal accidental death policies and same do not exonerate the employer from the liability under the said Act arising out of & in the course of employment.
Thanks
V K Gupta

If your company has provided an insurance and accident shell to its employees not covered under ESI, it's well and good policy. What I suggest instead of withdrawing the benefit, try to enlarge the scope by adding family in the cover and also enlarging the principle amount of insurance. By paying a little extra premium, it is possible to get back the medical expenses etc. It is also possible, if the burden of premium is heavy, to ask employees a little to share. But discontinuance of Group Insurance is not a good suggestion by any means.
Adv. K. H. Kulkarni

Dear Mubashira,
In my opinion the suggestion give by Mr.Baskaran is valid.
Banks may unilaterally decide to amend/ modify/ annul schemes applicable at their discretion and you do not have control over it.
Moreover, depending upon the age profile, years of service, nature of injury etc the compensation amount may vary from employee to employee but in my opinion an insurance provided in a salary account by a bank may not have such variables.
The procedures being followed by insurance companies from whom we take policies are structured and the principles of compensation are well laid down.
Hence, it is advisable to continue existing schemes without getting carried away by schemes being offered by external sources.
Regards
M.V.Kannan

First, I am surprised that your financial auditor asked you not to renew your insurance policies for staff. It is definitely not in his scope of work or his expertise to comment / advise on this matter. In any case, it would be a business decision that has nothing to do with the audit.

Second, the company (as already said) is liable under employee compensation act for any accident in the course of business. Further, most progressive companies would also provide medical cover for the employee (it may be even written in your terms of employment or a part of CTC)

In either of the cases, the comoany would be liable to pay the amount of money.

If the insurance was taken by the employer, then he can recover the money from the insurance company. Where the policy is in the name of the employee, or taken by the employee or by any third party, the employer can not take or claim that money. It will go to the employee. There have been court decisions ( google for it) where the courts have said that compensation guaranteed under law or contract needs to be paid even if the employee / victim has insured himself through other means. The courts have stated that the efforts of the employee / victim and his prudence in securing himself does not mean that he will be denied benefits under law or contract.

So you will be running high level of risks.

In addition, as others have stated, the banks may withdraw or modify any benefit unilaterally and in many cases without informing you. You also need to know which insurance company is involved and what is the terms, exclusions etc in the bank policy

In all, it would be a big mistake to follow the suggestion of the auditor.

Incidentally please message me the name of the audit firm that gave you such an advise.