Binding effect of Insurance Ombudsman awards requires full policy renewal continuity and pro rata premium collection for intervening claims.

An insurer that accepts an Insurance Ombudsman's award cannot implement it selectively or later rely on grievance rules or an administrative circular to avoid compliance; the award directing renewal of a mediclaim policy with continuity is binding. Where the Ombudsman further clarifies that pro rata premium is to be collected for the intervening period, the insurer must take that premium, treat the policy as continuous from the directed date, and process admissible claims arising in that interval. The operative effect is full compliance with the Ombudsman's directions, including payment of admissible claims with interest.

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Issues: (i) Whether the insurer could accept the Insurance Ombudsman's award only in part and resist renewal of the mediclaim policy from the date directed by the award. (ii) Whether the insurer was bound to collect pro rata premium for the intervening period and process the claims arising during that period.

Issue (i): Whether the insurer could accept the Insurance Ombudsman's award only in part and resist renewal of the mediclaim policy from the date directed by the award.

Analysis: The insurer had accepted the Ombudsman's awards but attempted to implement them selectively. The award directing renewal of the policy with continuity from the earlier date was unambiguous, and the insurer could not, after accepting that award, raise belated objections or rely on the grievance rules or a later administrative circular to avoid compliance. The court treated the Ombudsman process as an alternative dispute redressal mechanism whose award bound the insurer.

Conclusion: The insurer could not partially implement the award and was bound by the direction to renew the policy with continuity from 30-7-2003.

Issue (ii): Whether the insurer was bound to collect pro rata premium for the intervening period and process the claims arising during that period.

Analysis: The subsequent clarification by the Ombudsman required collection of premium on a pro rata basis for the period during which the policy had not been renewed and directed processing of the claims incurred in that interval. The insurer's reliance on advance receipt of premium did not justify refusal, because the award itself contemplated collection of the premium first and then adjudication of the claims on merits. The court found the insurer's refusal to be unconvincing and inconsistent with the binding directions.

Conclusion: The insurer was required to collect the pro rata premium, renew the policy for the intervening period, and process and pay admissible claims for that period.

Final Conclusion: The writ petition succeeded, and the insurer was directed to comply fully with the Ombudsman's awards by taking the pro rata premium, treating the policy as continuous from 30-7-2003, and paying the admissible claims with interest.

Ratio Decidendi: An insurer that has accepted an Insurance Ombudsman's award cannot selectively implement it or resist its binding effect by raising belated objections; where the award directs continuity of renewal, the insurer must collect the pro rata premium and honour the claims for the intervening period.

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