The Delhi High Court has held a person can approach insurance regulator IRDA seeking compensation for the loss suffered and it is empowered to appoint surveyors for assessing the quantum of damages.
Brushing aside the plea of New India Assurance Company that the IRDA (Insurance Regulatory and Development Authority) had no jurisdiction to entertain petition when the claim was solely denied by it, the court said the order appointing surveyors was “clearly pursuant to the mandate” of the Insurance Act and it was immaterial whether claim was admitted or rejected.
“Even in respect of a claim that has been repudiated by the insurer, it would be within the scope of the powers and functions of the IRDA to intervene at the instance of the aggrieved claimant… Therefore, by appointing independent surveyors and calling for a report, the IRDA did not commit any illegality,” Justice S Muralidhar said.
An independent surveyor is appointed by the insurer to assess the quantum of damages when a claim for compensation is made against any policy. The judgement was passed on a plea of the insurer challenging an order of appellate authority directing it to pay compensation of around Rs eight crore to an exporting firm, which claimed to have suffered a loss to the tune of Rs 40 crore due to an incident of fire.
In this case, an exporting firm had taken insurance cover under fire policy for the stock of red sanders in its go down in Andhra Pradesh, which was destroyed in fire. When the exporting firm sought damages, the insurance company rejected it on the basis of report of the surveyors appointed by it saying that the firm did not comply with the terms and conditions of the fire policy.
Aggrieved by the repudiation of the claim, the firm approached the IRDA which awarded a compensation of nearly Rs 2.2 crore on the recommendation of surveyors appointed by it. However, the appellate authority under the Central Government raised the compensation amount to around Rs 8 crore which was challenged before the High Court by the insurer.
Interpreting the provisions of the Insurance Act the court said, “It is plain that one of the functions of the IRDA includes protecting the interests of the policy holders in matters concerning settlement of insurance claims.”
“If the above provision has to be given a meaningful interpretation, keeping in view the objective of having the IRDA as an independent statutory authority, then clearly the intention of Parliament was to vest the IRDA with sufficient powers to discharge those functions.” The court said the damage assessment report by a surveyor was not binding on the insurance company generally but it must assign “good reason” while repudiating a claim.