In a significant ruling, the Kerala High Court has clarified the limits of the Insurance Ombudsman’s powers, stating that the Ombudsman does not have the authority to direct insurance companies to issue policies at specific premium rates. This decision came in the case of N.S. Gopakumar v. The Oriental Insurance Company Ltd. (WA No. 1349 of 2023), delivered on July 1, 2024.
Background:
The case originated from a dispute between N.S. Gopakumar and The Oriental Insurance Company Ltd. Gopakumar had been holding a medi-claim policy from the insurance company through Punjab National Bank since December 9, 2014. The policy was renewed annually until the period of December 9, 2017, to December 8, 2018. When Gopakumar approached the bank for renewal on November 29, 2018, he was informed that the premium had been increased from ₹7,172 to ₹19,587 per annum.
Objecting to this significant increase, Gopakumar filed a complaint with the Insurance Ombudsman. After initial proceedings and a writ petition, the Ombudsman passed an award directing the insurance company to issue a new policy to Gopakumar at the same premium rate as the expired policy, with continuity benefits.
Legal Issues and Court’s Decision:
The primary question before the court was whether the Insurance Ombudsman has the power to direct an insurance company to issue a medi-claim policy at a specific premium rate and to issue directions for payment of premium.
The Division Bench, comprising Justice A. Muhamed Mustaque and Justice Shoba Annamma Eapen, analyzed the Insurance Ombudsman Rules, 2017, particularly Rules 13 and 17.
The court observed that while Rule 13 outlines the duties and functions of the Insurance Ombudsman, including considering disputes over premiums, Rule 17 specifically deals with the Ombudsman’s power to pass awards. The court noted:
“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 further clarified that the Ombudsman’s power to award compensation is limited to the actual loss suffered by the complainant or a maximum of thirty lakhs rupees.
Based on this interpretation, the court dismissed the appeal, upholding the earlier judgment of the Single Judge that had quashed the Ombudsman’s directions to the insurance company.
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Parties and Representation:
– Appellant: N.S. Gopakumar, represented by Advocates K. Shrihari Rao and N. Shobha
– Respondent: The Oriental Insurance Company Ltd., represented by Standing Counsel Smt. K.S. Santhi
Case Details:
– Case Number: WA No. 1349 of 2023
– Earlier proceedings: WP(C) No. 21288 of 2022 and RP No. 304 of 2023
