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Insurance – Ombudsman Award – Implementation by Insurer – IRDAI Notification of 25.4.2017.

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By the Ombudsman Award dated 3.5.2021, the Insurance Company was directed to pay Rs.27,13,582/- to the Petitioner Bharat against his health insurance policy.

Since the Award was not implemented, Bharat filed writ petition on 3.9.2021.  After intimation of this petition, the Insurer filed a writ petition on 12.10.2021 challenging the Award.

The Award was not complied on the ground of pendency of writ petitions.  Moreover, the Insurer did not bother to remove office objections till December 2024.

HELD that Clause 13 of IRDA’s Notification dated 25.4.2017 dealing with the duties and functions, provides for the powers to deal with any other matter resulting from violation of Insurance Act, 1938, or regulations, circulars, guidelines or instructions of IRDAI or the terms and conditions of the policy. Thus, the Ombudsman has powers to consider disputes relating to the policies. Clause 13 must be construed liberally and not pedantically.

Judgment dated 9.12.2024 of the High Court of Bombay (OS) in Writ Petition No.2903 of 2021 of Bharat Hirji Dedhia Vs. Union of India and others with connected matter.

Rejecting the contentions and challenges of the Insurer, the High Court has strongly deprecated the conduct of the Insurance Company on the following grounds –

  1. Clause 17(6) provides for compliance of Ombudsman Award in 30 days and Clause 17(8) states that the Award is binding on the Insurer.
  2.        Insurer did not challenge the award and did not obtain any interim relief for stay.
  3. The explanation that the award was not complied with because writ petition of Bharat was pending adds salt to Bharat’s injuries.
  4. The writ petition of the Insurer was dismissed with costs of Rs.1 lakh.
  5. Enquiry into the responsibility of officials responsible for the delay in complying with the Ombudsman Award, to recover exemplary costs / interests from their salaries and entries in the confidential rolls / service records.  The directions to file compliance report to the High Court on or before 16.5.2025.

The IRDA must consider whether in addition to the mechanism already provided, any further directions could be issued to the Health Insurance Providers to repot compliances or for the IRDA to monitor compliances or digital monitoring so that the policy holders are not forced to approach Constitutional Courts only to enforce Ombudsman’s awards and it has data on the awards made under the Notification dated 25.4.2017 and the status of compliances.

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