Insurance Ombudsman Cannot Direct Insurance Company To Issue A Policy At A Specified Premium: Kerala HC

The case originated when appellant contested a significant increase in the premium for his medi-claim insurance policy with the Oriental Insurance Company Ltd. Initially paying ₹7,172 annually, he was later informed of a revised premium of ₹19,587 upon seeking renewal in 2018. Dissatisfied with this hike, he lodged a complaint with the insurance ombudsman, seeking intervention.

Although the ombudsman initially dismissed his complaint, subsequent court orders prompted a reconsideration. The ombudsman then directed the insurer to renew his policy at the original premium rates. However, this directive was challenged by the insurance company in the Kerala High Court.

A single judge of the High Court had ruled in favor of the insurance company, prompting petitioner to file a review petition, which was also dismissed. Subsequently, he appealed to a Division Bench of the High Court, which thoroughly examined the provisions of the Insurance Ombudsman Rules.

A Division Bench of Justice A Muhammed Mustaque and Justice Shoba Annamma Eapen held that the insurance ombudsman does not possess the authority to direct an insurance company to renew an insurance policy at a specific premium rate. The Court said, “Nowhere in the Rules it is stated that the Insurance Ombudsman has power to issue directions to the insurer to issue a policy at a specified premium. Even if the Insurance Ombudsman finds that an award has to be passed in favour of a complainant, the power conferred on him as per Rule 17 of the Rules is only to award compensation and not to give any direction to the insurer.”

Advocate K Shrihari Rao appeared for the Appellant and Advocate KS Santhi appeared for the Respondent.

The Bench emphasized that these rules do not explicitly grant the ombudsman the power to issue directives regarding the terms or premium rates for policy renewals.

The Division Bench highlighted Rule 13 of the Ombudsman Rules, which permits the ombudsman to adjudicate on complaints regarding premium payments but reiterated that this does not extend to mandating specific terms for policy renewals.

The Court added, “Though in Rule 13 of the Rules, duties and functions of Insurance Ombudsman include the duty to receive and consider complaints or disputes relating to disputes over premium paid or payable in terms of insurance policy, as far as Rule 17 is concerned, it entitles the Insurance Ombudsman to pass awards after consideration of the complaint filed by the complainant. Ext.P8 award passed by the Insurance Ombudsman is found to have exceeded the jurisdiction and it is unsustainable in law, since it gives a direction to the respondent insurance company to issue to the complainant a policy covering himself and his eligible family members at the same premium as was charged under a policy that expired on 08.12.2018.”

Consequently, the Division Bench upheld the single judge's decision to set aside the ombudsman's directive for renewal at the original premium rates, deeming it beyond the ombudsman's lawful authority.

The Court dismissed appeal accordingly.

Cause Title: NS Gopakumar v. The Oriental Insurance Company Ltd & Anr., [2024/KER/47860]

Appearance:

Appellant: Advocates K Shrihari Rao and N Shobha