INDIA Law and Practice Contributed by: Neeraj Tuli, Celia Jenkins and Rajat Taimni, Tuli & Co
Insureds Insureds have no exclusive judicial forums available to them for the resolution of insurance or reinsurance disputes. Insureds, however, are treated in law as consumers of insurance services and can therefore approach the consumer courts for relief. Insureds can also approach commercial courts or civil courts, depending upon the value of the claim, or can invoke arbitration for recovering monies under an insurance policy – provided the insurance policy contains an arbitration clause. However, the right to approach a consumer forum exists even where an arbitration clause is in place. Disputes before consumer forums Consumer courts follow a three-tier hierarchy, which – in ascending order – is as follows: • the District Consumer Disputes Redressal Com- mission (the “District Commission”); • the State Consumer Disputes Redressal Commis- sion (the “State Commission”); and • the National Consumer Dispute Redressal Com- mission (the “National Commission”). Consumer courts have the jurisdiction to deal with complaints arising out of a contract for services or goods involving allegations of “deficiency in service”. The District Commission can entertain complaints where the consideration does not exceed INR5 mil- lion (approximately USD60,000). For the State Com- mission, the threshold is from INR5,000,001 (approxi- mately USD60,000) up to INR20 million (approximately USD236,000), whereas the National Commission can adjudicate original complaints where the consideration is above INR20 million (approximately USD236,000). The District Commission and the State Commission must also possess the necessary territorial jurisdic- tion. A person availing a service for commercial purposes is excluded from the definition of a “consumer” under Indian law. Recently, the Supreme Court of India in National Insurance Co Ltd v Harsolia Motors (2023 INSC 367) has clarified that an insured comes within the scope of “consumer”, given that availing an insur- ance policy is an act of indemnifying a risk of loss/ damages and there is therefore no element of profit
If any condition precedent has been breached, the insurer has the right to repudiate the claim. However, where it is not expressly stated, the Indian courts will make efforts to decide whether a particular clause is merely a condition or a condition precedent to the insurer’s liability. 9. Insurance Disputes 9.1 Insurance Disputes Over Coverage Insurance policies are structured to incorporate com- prehensive mechanisms for dispute resolution, both in respect of coverage and quantum disputes. Insur- ance policies typically include details of the insurance ombudsman appointed to address insureds’ com- plaints (inter alia) regarding the settlement of claims. The IRDAI requires insurers to formulate a grievance redressal policy and file it with the IRDAI. An insurer is also required to provide the details of the grievance redressal mechanism within the policy. Insureds who have complaints against insurers must first approach the grievance or customer complaints department of the insurer. If the insurer fails to reply or the insured is not satisfied with the insurer’s reply, the insured can approach the insurance ombudsman, provided: • the claim value is up to INR5 million (approximately USD60,000); and • the complaint is made within one year from: (a) the date of the rejection of the complaint by the insurer; or (b) the expiry of one month following filing the complaint if the insurer fails to reply. Insurers are required to form a part of the Integrated Grievance Management System put in place by the IRDAI to facilitate the registration/tracking of com- plaints online by the insureds. In cases of delay or no response relating to policies and claims, the IRDAI can take up matters with the insurers to ensure speedy resolution. Although the insureds can approach the IRDAI for assistance, advocates, agents, and other third parties are not permitted to do so.
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