[Insurance Ombudsman Rules] Rule 17 Empowers Ombudsman To Grant Compensation But Gives No Power To Issue Directions Upon Insurer: Kerala HC

The Court was considering whether an Insurance Ombudsman could direct the Insurance Company to issue a Medical Insurance Policy to the appellant and his eligible family members at the same premium rate without enhancement while renewing the policy.

The Division Bench comprising Justice A.Muhamed Mustaque and Justice Shoba Annamma Eapen observed that the Insurance Ombudsman has exceeded his jurisdiction by directing the Insurance Company to give the appellant Medical Insurance Policy at the original premium rate without enhancement.

“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.”

Rule 13 pertains to the powers and duties of an Insurance Ombudsman and Rule 17 deals with the powers of the Insurance Ombudsman to pass Awards.

Background Facts

In the present case, the appellant had taken a medical insurance policy from the Oriental Insurance Company through the Punjab National Bank as per PNB-Oriental Royal Medi-claim policy from 2014 onwards. When the appellant approached the Bank to renew the policy, he was informed that the premium for renewing the policy had been increased. The appellant objected to the enhanced rate of premium. The insurance company stated that the revision of the premium was nominal due to the medical inflation. The appellant submitted his complaint before Grievance Cell and he was issued with a letter stating reasons for the enhancement of the premium.

The appellant then filed a complaint before the Insurance Ombudsman and his complaint was dismissed by an Award. The appellant preferred a writ petition against the Award. The single judge set aside the Award by directing the Insurance Ombudsman to reconsider the complaint and pass the Award after giving a hearing opportunity to the appellant. Thereafter, the Insurance Ombudsman passed an Award directing the Insurance Company to give the appellant and his eligible family members a policy at the original premium rate. 

Aggrieved by the Award, the Insurance Company preferred a writ petition and subsequently, the Award was set aside. The single judge held that the Insurance Ombudsman only has the power to award compensation under Rule 17. The appellant sought review which was also dismissed. Aggrieved by this, the appellant preferred this Writ Appeal.

The appellant contended that as per Rule 13, the Insurance Ombudsman has the power to direct the Insurance Company to renew the Medical Insurance policy by collecting the premium at the original rate.

On the other hand, the Insurance Company submitted that the Insurance Ombudsman is empowered to pass awards under Rule 17, while Rule 13 only lays down the duties and powers of the Insurance Ombudsman.

Observations

The Court analyzed Rules 13 and 17 of the Insurance Ombudsman Rules, 2017. Interpreting Rules 13 and 17, the Court said: “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.”

The Court stated that as per Rule 17, the Insurance Ombudsman was empowered to pass an Award granting compensation to the complainant. However, the Court stated that Rule 17 does not enable the Insurance Ombudsman to give any direction to the Insurance Company.

As such, the Court dismissed the writ appeal.

Counsel for Appellant: Advocates K.Shrihari Rao, N.Shobha

Counsel for Respondents: Standing Counsel K S Santhi

Citation: 2024 LiveLaw (Ker) 401

Case Title: N S Gopakumar v The Oriental Insurance Company Ltd.

Case Number: WA NO. 1349 OF 2023

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