Q iar t4 IJITW Ch I ^a mi^lCFm*Q INSURANCE REGULATORY AND
JO DEVELOPMENT AUTHORITY
Ref. Circular Ref. CAD/Insu. Omb/10-I 1
The CEOs of all General and Life Insurers
November 23 2010
Re: Order dated 09.09.2010 passed by Delhi High Court in W.P.No.10638/06 -Vinod Kumar Aneja vs. NIA and Others - Awards passed by Insurance Ombudsman
We enclose a copy of award passed by Delhi High Court in the above case. The Hon'bleCourt had, inter alia, made the following important observations in this case:
• It is not open for the insurer to challenge the Award of the Ombudsman.
• The mechanism of adjudication by the Insurance Ombudsman is an alternative disputeredressal mechanism envisaged under the RPG rules 1998 and the insurers havethemselves devised this dispute redressal mechanism and have also bound themselvesunconditionally to honour such Awards.
You are advised to be guided by the above observations of the Hon'ble High Court. AllCases filed by your Company against the orders of Ombudsmen should be reviewed in thelight of the observations made in the cited case and the final status of these cases, if any, beinformed to us immediately.
97 6 C,,,- Ck
(A.Giridhar)Executive Director
,Tftpm wfq, c m cra, 111, a? i^-500 004. qic Parishram Bhavan , 3rd Floor, Basheer Bagh , Hyderabad -500 004 . India.© : 91-040-2338 1100,6: 91-040-6682 3334 Ph.: 91-040-2338 1100, Fax: 91 -040-6682 3334
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C S._
IN THF: IIIGII cot RF OF Di l iiI AT \I. \V' D:1,111
R-114.
W.P.((')N o. 10038 u1*_006
VINOI KUMAR ANI.I;A (Since deceased)TIIROI 'Gil: Ills H-'C1\l 1-11-1,116Ms. VI -.I "NA ANLJA &- (.)RS.
Thn t, h: None...... Petitioners
NEW INDIA ASSURANCE CO. L'I 1). & ORS. ..... RespondentsThrou h: Mr. Sal 11 Paul, Advo : ate for R- I .
COR,\\1: .iUti'I'ICI ^. tY[URA.I.Ii)IJAR
01
I
'%,
versus
ORDI'1209.0 9.2 (11 I1
1. The prayer in this writ petition is for a mandamus to he issued to
Respondent No.1 New Indi: t Assurance Company Ltd. ('NIACI.) to
reimburse the expenses incurred by the Petitioner Io %%Iards the treatment of
cancer (intravenous chemotherapy) in terms if ' the medickuin policy taken by
the Petitioner . The second prayer is for a direction to Respondent No.1 to
implement the Awards dated 18t1i March 2 004 and 2(i '' April 2005 of the
Insurance Ombudsman by accepting the requisite premium for the period 301t'
July 2003 to 11^t' April 2004 on Pro rata ha_.i:, from the Petitioner and process
the claim in respect of the medical expel:-,,s incurred by hire during that
period, and pay : hire the admix ihIC claim att , nunts.
2. The facts leading to the filin g of this petition are titut on 30th July 1999 the
Petitioner took a mediclaim policy from N;itional Insurance Company Ltd.
(`NICI.'). This policy was regularly renev.cui till 291' .tiny 2002 . 'T'hereafter,
the Petitioner switched over to Respondent No.). The policy was to expire on
P•/C) Na 1063H :. f 2006 Page I of 9
281h July 2003 and on 10'h July 2003 the Petitioner deposited a cheque of Rs.
10,129/- with Respondent No.1 for renewal of his mediJairn policy. It may
be mentioned that by that time, the Petitioner had lodged the following claims
which were all paid by Respondent No. I :
Si. N_ ^. I reatment Pei-lo rd mount Status(A) X20.1.2003 to -6.2.200611283- Paid
A
(13) 18.3.2003 to D) -1.2003 x,0654,- Paid(C) __ .18.4.2003 to 12 .().2003 Qo63/- Paid(I)) .15.6.2 003 to S. -.,0n :11(1 1/- 1(I:.) 118.7.200: to 2 7.7.2003 i L)15/- t'aid
3. The Petitioncr states that no reply was received as r.c 'ards his request fines
renewal. It v as disclosed to the Petitioner that rene" al could be only after
excluding the clause for cancer treatment It was , i,o conveyed that the
policy was oni% for one year ,u;d It was in tie discretil-:, of Responden: No.i
whether to renew the policy or not. A further up:Hlication made by the
Petitioner on 30`1, July 2003 enclosing the t mewal p- a, ,um. was returned
Respondent No.I I.
4. Consequently, on 30t1' July 2003 and 8 `t' August 2ttn; , the Petitioner filed his
claims before the Insurance t. ► tnbudsman (I )elhi & R tja,than). On 18th March
2004, the Insurance Ombu,is man passed an aw;-i,i 'that the New India
\ssurance 1- mnipany Ltd. shall renc'.\ the n c ciclaini policy of the
complainant and shall give him all the bcttelits of . •atirnuty as if his poiic.
had been renewed on 30`x' July 2003 without any br,•; i,-.,.
5. Before th:' Insurance Oml,udsman. Rc^,p udent No ; was represented by its
Branch N1i, cer Shri D.K. Khanna 1 hands . aver to the Insurance
r
Ombudsman a letter dated 30"' luly 2004 si1_-ii,,d by it,< ► ^', isional Manager in
which the reasons for not rent ^^i ► tg the medic aim poii, of' the complainant
had been sununarized.
6. The first reason given by Respondent No. I was tha; in the very first year
itself the Petitioner had made Iive claims and, there; or.:. had taken a policy
"only with a view to making claims." This was re;, c•_•d by the Insurance
Ombudsman by pointing out that during the previous ve: ► rs the Petitioner had
a policy with the NIC1, i.e. li,,nt 30`11 July ;)')9 till ." July i002. lie had
made no claii, and in Fact i. ,: ► rned a mulati . onus of 15°,o. The
second reason was that the Petitioner had concealed material facts in his
proposal form that he was still'erin- from hypertension and bronchitis. This
was also rejected by the Insurance Ombudsman. It was noticed that in a
covering !.;ttct dated 8"' February 2003, the conipkiti wit described his case
history and I u he had been ! .. pertensivc t, -r the l:: a our years. 1lowever.
there was no concrete evidctt,.c to show tl ► at there y t a firm diagnosis of
hypertension prior to 30`h July 1999. hurt her, there c .ts no diagnosis of the
Petitioner suffering from bro-tchitis. Cai.-er had h,c_ iagnosed only during
the early part of 2003. 'fhc , aims were I respe treatment of cancer
which developed only in carly part of '003. 1 mere 'ias, therefore, no
suppression of any n ► ateriai facts. It wa:. held by Ittsura cc Ombudsman
as under:
"\Vhat applies to renewal also applies to claims If the
Insurance Company had any concrete evidet,,:c to prove that
the complainant had suppressed material t acts regarding his
ailment, then the claims ought not to have !)ecn ent rained;
they ought to ha,.c been repudiated. OI) the contrary, the
Insurance Company has admitted that it hats paid all the
W.P.(C) No. 106 iR of 2006 Page 3of9
claim.; of the complainant . If that is so, then there is
absolutely no reason why the me,iiclaim policy of the
complainant should ii,,( be renewed ..
7. It was in the above circuurAances that the Insurance Ombudsman in the
Award dated IS'" March 2007 concluded as under:
"the action of the Insurance Company in t;ic case of the
complainant is high-handed and arhiuary and .n; worthy of a
public sector company A Public hector Company should
have rood and sufficient reasons hetore ret'u:,u i,g to renew
the Mediclaiin policy ot'a customer In the present case, the
Insurance Company has not valid reason at ;ill for refusing
to renew the Mediclaiin policy of the eonipl;!'u;int."
AOk
Consequently. tlic directions as set out in p;_u;a 4 above were issued by the
Insurance Onlb,idsnlan.
8. It is not in dispute that Respondent No.1 accepted the above Award dated
18`1' March 2001 of Insurance ( )n,budsman. 1 lowever. the Petitioner's policy
was renewed funn 15'r' April '04 to 14"i .April 200. The Petitioi.-^r then
wrote to Respondent No. I on :2.-1"' April 200-1 pointing out that this failure to
renew the policy from 30't' July 2003 onwards may have been because of an
inadvertent error and that the necessary endi,isement 5 imuld be made on the
renewed policy He followed tiro by remir;,ierz on 2S' :April 20(14 and 12
May 2004. When there was no response. lie was compelled to again approach
the Insurance Ombudsman with a letter dated 1-l't' May 2OU4.
9. The stand of Respondent 1 was that the Insurance Ombudsman had
exclusions (although there is gap in insurancL • i for all fi:t.ire claims except all
claims incurred during the intervening period 30`h Jul% 2003 to 14th April
2004 . In other words all expenses incurred during the i:ltervening period are
not payable under the policy".
10. It is pointed out by the Petitioner that , !aims ma,
April 2004 were honoured by Respondent but I1,1t the claims made
between 30' ► ' July 2003 and 14``' April 2004. Again, the claim made by the
Petitioner on 9"' February 2005 was rejected on the gr,,und that "claims for
oral chemotherapy shall not be admissible".
11. On 26'11 April 2005, Office of Insu;: ace Ombu dsman wrote to the
Respondent No. 1, with a copy to the Petitiolk i. clan ifyil , as under:
"On the basis of m} Award dated 18'h March 2004, the
course of action to l c adopted by the Insur.u:ce Company
now is to collect from the Lomplainant the requisite
prerrilunl for tine period 30th July _1.u03 to 14` April 2004 on
pro rata basis and to process the claims in respect of
medical expenses incurred by the complairl,uut during this
per111d and pay him the admissible claim a:l:,,unts after due
scrutiny of hills".
13. During the pendency of this writ petit i on, the I'ei^tioner expired and his
legal representatives were brought on rcc'^rk'. by an under dated 1 1 h l ebruarv
200x.
14. The submissions of Mr. Salil Paul, learned couti`c! ('Or Respondent No. I
have been heard. He submitted first that although I`:•.>pondcnt No.l had not
challenged (lie Award dated 18`t' March 2(104 or sub>,:.luent directions dated
26`h April 2005 of the Insurance Ombudsman, Res!:ondent No.1 had in fact
partly implemented the said Award by renewing the niediclaim policy from
15`h April 2004 to 14`h Apri! 2005. When asked .\ Iiy the policy was not
renewed with effect from July 2003 itself, he erred to Section 64 VB
of the Insuruu>.ce Act which Lays down "no risk to I'e -t-.SUmed unless premium
is received in advance". It is submitted that since Respondent No.l had not
collected the premium for the period ?0°i July 2003 to 14`h April 2004, it
could not entertain the claims arising during this period. Secondly, it is
submitted that the Insurance Ombudsman could not entertain claims in respect
of non-renewal of mediclaitn policy as they do not Id!! under any of the five
' categories of complaints that can be entertained ! the Insurance Ombudsman
under Rule 12(3) of the Redressal of Public Grievance ('RI'G') Rules, 1998.
lie referred to a clariiicat.lrv Circular d,,ted 18"' N Lurch 2004 issued by the
governing body of the General Insurance Council. M _ mbai where after noting
the above RPG Rules it \%as directed that Insurance Ombudsman may be
advised 'in to entertain complaints in respect of rton-renewal of mediclaitn
policies by general insurers. Ile also relied upott the judgment of the
Karnataka High Court in B. Krishna 1'11at v. llni n of India (decision dated
30`h July '002 in W.P. No. .)429 of 2001).
W.P.(C) No. 11)638of 2006 Page 6 of 9
15. This Court rinds that the above stand of l.csponderii No. I is untenable. It
is not open for Respondent No 1, after accepting the A\\ ands dated 18"' March
2004 and- 26"' April 2005 of the Insurance Ombudsman, to choose to
implement such Awards only in part. No objections to the Awards of the
Insurance Ombudsman by Respondent No. 1 cars be pcrl,witted at this stage. In
fact, it is not open to the insurance companies to challenge such Award to the
Insurance' Ombudsman . The mechanism of an adjudication by the Insurance
Ombudsman is an alternative dispute redressal mechanism envisaged in the
RPG Rules, 1978. Therefore. a claimant ruder a police has to necessarily go
before the Insurance Ombudsman in the first place for redressal. The
insurance companies have themselves devised tlii:o dispute redressal
mechanism . They have also bound themselves unconditi<-^nally to honour such
Award of such Insurance Ombudsman. It too late in the day for
Respondent No. I to seek to wu gle out of the Awards dated 18"' March 2004
and 26"' April 2005 of the Insurance Oinbudsmai: on im.v ground whatsoever.
The decision III B. Krishna Bhat was in it di ffel ant set of facts. In that case
there was no order of the Insurance Otnbudsinan that was binding on the
insurance company.
16. The Award dated i 8"' `.larch 2004 has in fact been acted upon by
Respondent No.], but for some reason, only in part The reasons for not
v therho ,,. , rnnfin !1oiiclt, frnm 'n" lido ')O1 is mandated b
r
dated 26"' April 2005 , Respondent No.] ought to have c. Ilected the premium
pro rata ibr the period 30"i July 2003 to 14"' April 'ttt)4 and renewed the
mediclaint police of the deceased Petitioner h r this period as well
The e in1uuuicatjon dated 181t' March 200.1 ti in the office of the
governing body of the Gcnel;il Insurance Council it '\lumbai ad-,Isuwg the
Insurance Ombudsman not to cutertain con plaints in i.pect of non-renewal
of mediclaim :>olicies, was i< ued on the same date the Award of the
Insurance Oml udsman i.e. 1S'" March 200-1 Without ^ \-imining the question
of validity of , Bch advice, this ('Dort is of the view that the said advice could
not govern the Award dated I ^" March 2004hwhich had already been passed
on that day in respect of the complaint of the Petitionci ,^ I,ich was made prior
!hereto,
18 Consequently, the writ petition is allowed ith direction to
Respondent N,).I to commumiicate to the Petitioner', LRs the pro rata
premium aim uit payable lur the renewal of the ii ediclaiut policy of
the Petitionei for the period 30`t' Jule 200-) to 14"' April 2004
within a period of two weeks from today. The I.Rs of the deceased
Petitioner will make the pavnicnt of the said premium amount within
a further pei iod of two weeks thereafter Within further period of
four weeks thereafter. Respondent No 1 will process all the claims
from the date of the claim till the date of its payment. \Vith the consent of the
other I,Rs, tlt payment be made to Slut. Vecna .\ neja the wife of the
deceased Petitioner . Absent such consent, the amount will be paid in three
equal shares by three sepanac cheques in favour of each of the three LRs.
The writ petition is accordingly allo\\cd in tic above terms, in the
circurnstancc^ with no order as to costs.
^c^) ^- -
S. t\1URALII ) IIAR, J
SEPTEMBER 09, 20111
do
W.P.(C) No . 10638 of 2006 Page9 of 9