Insurance query , need some solutions if have

Please help me to get a possible solution on the query that we still eligible for claiming the amount .
My uncle has buy a house and for that he had taken home loan from Pravite financial institution and to protect itself against said loan buying insurance policy from third party ICICI.
but due to some medical sickness he was admitted to hospital and some serious medical issue he was not recovered and ultimately deid.
So, during all these circumstances one issue is come when claim loan disbursement is not done by institution when he die but insurance company icici has released the policy.

We had applied for claim but insurance company deny to accept claim and saying reason loan in not disbursement by institution buy they reversal the premium amount to finance institutions by saying becasue he insurance apply form there side on behalf of us.

please guide if have some technical or legal action still to claim the insurance amount deducted in this situation