High Court Upholds Insurance Ombudsman ’s Award in Favor of Senior Citizen

Background

In a significant ruling, the High Court of Judicature at Bombay addressed two writ petitions concerning an insurance dispute involving Bharat Hirji Dedhia, a 68-year-old petitioner, and the Oriental Insurance Company Ltd. The case revolved around the enforcement of an Insurance Ombudsman ’s award dated May 3, 2021, which directed the insurance company to pay Dedhia ₹27,13,582 for health insurance claims. The insurance company contested the award, claiming it exceeded the Ombudsman ’s jurisdiction.

Arguments

Petitioner’s Arguments

Bharat Dedhia, represented by his attorney, argued that the insurance company failed to comply with the Ombudsman ’s award despite assurances of payment. His counsel emphasized that the insurance company accepted the premium and issued the policy, thus binding them to honor the claim.

Respondent’s Arguments

The Oriental Insurance Company contended that the Ombudsman acted beyond its jurisdiction, asserting that the health insurance policies were void due to non-disclosure of pre-existing conditions. They argued that the claim should have been rejected outright and that the Ombudsman had no authority to award more than the insured amount of ₹25,00,000.

Court's Analysis and Reasoning

The court analyzed the arguments presented by both parties, emphasizing the binding nature of the Ombudsman ’s award under the Insurance Regulatory and Development Authority (IRDA) guidelines. The judges noted that the insurance company had not raised its jurisdictional challenge during the Ombudsman proceedings and that the acceptance of the premium and issuance of the policy constituted a binding contract. The court criticized the insurance company for its delay in complying with the award and for suppressing relevant documents.

Decision

The High Court dismissed the insurance company’s petition, ordering it to pay the awarded amount along with interest at 7% per annum from July 1, 2021. Additionally , the court imposed exemplary costs of ₹1,00,000 on the insurance company for its conduct and mandated an inquiry into the officials responsible for the delay in payment. This ruling reinforces the importance of compliance with Ombudsman awards and holds insurance companies accountable for unjustified delays in settling claims.