In a significant ruling, the Kerala High Court has clarified the limits of the Insurance Ombudsman’s authority regarding insurance policy renewals. This decision comes as a crucial guide for policyholders and insurers alike, particularly for those involved in disputes over premium rates.
The case in question involved NS Gopakumar(“the Policy holder”), who was dissatisfied with a substantial increase in his medi-claim insurance policy premium from Oriental Insurance Company Ltd. Initially, he paid ₹7,172 annually for his policy, but upon renewal in 2018, the premium had risen to ₹19,587. Frustrated with the steep hike, he approached the Insurance Ombudsman, seeking intervention to renew his policy at the original rate.
Initially, the Ombudsman dismissed the complaint, but following a court order, reconsidered and directed the insurer to renew the policy at the original premium. Oriental Insurance company challenged this order before the Kerala High Court.
The Kerala High Court, comprising Justice A Muhammed Mustaque and Justice Shoba Annamma Eapen, ruled that the Insurance Ombudsman “does not have the authority” to mandate a specific premium rate for policy renewals.
The Court directed, “Though in Rule 13 of the Rules(Insurance Ombudsman Rules, 2017), 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.”
1. The Insurance Ombudsman’s role, as per the Insurance Ombudsman Rules, is to address complaints and disputes over premiums paid or payable but does not extend to dictating renewal terms or premiums. Rule 17 of these Rules allows the Ombudsman to award compensation but does not grant the power to enforce specific policy conditions.
2. The Division Bench clarified that Rule 13, which outlines the Ombudsman’s duties, does not empower the Ombudsman to set terms for policy renewals or premiums. Their role is confined to adjudicating disputes rather than setting premium rates.
3. The Court found that the Ombudsman’s directive to renew the policy at the original premium rate was beyond its jurisdiction and thus unsustainable in law.
This ruling underscores the importance of understanding the Insurance Ombudsman’s role and limits. While the Ombudsman can help resolve disputes and provide compensation, they cannot dictate specific renewal terms or premium rates. Policyholders should be aware that their grievances might not always result in changes to policy terms but rather in compensation or other remedies.
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