Insurance ombudsman cannot dictate terms of insurance policy renewal: Kerala High Court

The Kerala High Court recently held that the insurance ombudsman does not have the power to direct an insurance company to renew an insurance policy at a particular premium rate [NS Gopakumar v The Oriental Insurance Company Ltd & anr]..A Division Bench of Justices A Muhammed Mustaque and Shoha Annamma Eapen explained that as per Rule 17 (award) of the Insurance Ombudsman Rules, 2017, the ombudsman is only empowered to award compensation to aggrieved complainants. "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," the Court ruled. .The Court made the observation while dismissing an appeal filed by one, NS Gopakumar (appellant) who had taken a medi-claim insurance policy from the Oriental Insurance company.Initially, the annual premium amount for this policy was ₹7,172. However, when the appellant sought to renew his policy in 2018, he was informed that the premium payment had been increased to ₹19,587. Objecting to this hike, the appellant approached the insurance ombudsman with a complaint. Although the complaint was initially dismissed, the matter was reconsidered by the insurance ombudsman following orders by the High Court to do so. Upon reconsideration, the ombudsman directed the insurance company to renew the appellant's medi-claim policy at the original premium rates.This decision was challenged by the insurance company before the Kerala High Court. A single judge of the High Court ruled in the insurance company's favour. The appellant filed a review petition against the single judge ruling, which was also dismissed.Subsequently, the appellant approached the Division Bench of the High Court with the current appeal..The Division Bench noted that Rule 13 of the Ombudsman Rules empowered the insurance ombudsman to hear complaints about premium payments. However, the Bench pointed out that this rule does not grant the ombudsman power to dictate the terms of policy renewals. Further, the Court noted that when it comes to deciding on disputes, the ombudsman’s power is confined to awarding compensation, as per Rule 17 of the Ombudsman Rules.The Division Bench, therefore, held that the single judge was correct in setting aside the insurance ombudsman's directive for the renewal of the medi-claim policy at the original premium rates. "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," the Court concluded. .The Court, thus, dismissed the appeal..The appellant was represented by advocates K Shrihari Rao and N Shobha.Standing counsel KS Santhi appeared for Oriental Insurance Company Ltd..[Read Judgment]