Diwan Advocates

Insurance Law Practice

A family's breadwinner dies. The life insurance claim is filed. Three months later, the insurer repudiates it on the ground of non-disclosure of a pre-existing medical condition that appeared in a health check-up two years before the policy was taken. The family believes the condition was not material and was not asked about at the time of application. The insurer disagrees. There is a policy, there is a death, and there is a dispute about whether the insurer must pay.

A manufacturing company's factory catches fire. The fire policy covers the plant and machinery. The insurer sends a surveyor. Six months later, it offers a settlement that is forty percent below the declared sum insured, citing under-insurance and a dispute about the cause of loss. The company has taken out a policy precisely to avoid bearing this risk itself. The gap between what it expected and what the insurer is offering is enormous.

These situations, claims repudiated or settled far below what was expected, are the most common reason clients come to an insurance lawyer. But insurance law is not only about disputes. It also covers the regulation of insurers and intermediaries by IRDAI, the design and approval of insurance products, the obligations of brokers and agents to their clients, the reinsurance arrangements that sit behind every large risk, and the emerging regulatory framework for InsurTech businesses that are changing how insurance is distributed and underwritten.

At Diwan Advocates, we advise both sides of the insurance relationship. We represent policyholders challenging repudiations and inadequate settlements. We advise insurers on regulatory compliance, claims handling, and IRDAI proceedings. We advise insurance intermediaries on their licensing obligations and on disputes with insurers and clients.

The Regulatory Framework: IRDAI and the Insurance Act

The Insurance Regulatory and Development Authority of India is the primary regulator for the insurance sector, established under the IRDAI Act, 1999 and exercising extensive powers under the Insurance Act, 1938. Every insurer operating in India must be registered with IRDAI. No insurance business may be transacted without registration. IRDAI approves insurance products before they can be offered to the public, sets solvency and investment requirements for insurers, licences intermediaries including brokers and corporate agents, and conducts inspections of regulated entities.

IRDAI has become significantly more active in recent years. The IRDAI (Insurance Products) Regulations, 2024 consolidated and replaced a large number of earlier product-specific circulars and regulations, simplifying the product approval framework but also raising the compliance baseline. The Insurance Laws (Amendment) Act, 2015 strengthened policyholder protections, increased penalties for violations, and paved the way for raising the FDI cap in insurance from 26 percent to 49 percent, subsequently raised to 74 percent. The sector continues to evolve rapidly.

Life Insurance: Policy Terms, Claims, and Repudiation

The Duty of Utmost Good Faith

An insurance contract is a contract of utmost good faith. Both parties must disclose all material facts. The policyholder must disclose all facts that would influence a prudent insurer in deciding whether to accept the risk and at what premium. Failure to disclose a material fact, whether intentional or not, gives the insurer the right to avoid the policy. The question of what is material and whether non-disclosure was fraudulent or innocent determines the strength of the insurer's repudiation.

The courts and consumer forums have scrutinised insurer repudiations on non-disclosure grounds carefully. Where the insurer accepted the proposal without asking specific questions about a particular condition, accepted the premium for several years, and then repudiated on the occurrence of a claim, courts have in many cases held that the insurer cannot rely on non-disclosure of facts it did not specifically ask about. The IRDAI has issued guidelines limiting the period within which an insurer can repudiate a life policy on non-disclosure grounds to three years from the date of issuance.

Claim Repudiation: Grounds and Challenges

The most common grounds on which life insurance claims are repudiated are non-disclosure of material facts including pre-existing medical conditions, misrepresentation in the proposal form, death occurring within the exclusion period for specified conditions, suicide within the first year of the policy, and death by exclusions specifically listed in the policy terms. We review repudiation letters for their legal and factual basis, advise policyholders on the strength of their position, and represent them before the Insurance Ombudsman, Consumer Commissions, and courts.

Insurance Ombudsman

The Insurance Ombudsman is a free, accessible, and faster alternative to consumer courts for individual policyholders with claim disputes up to Rs 50 lakh. IRDAI has notified Ombudsman Councils across India. The Ombudsman hears complaints about repudiation of claims, delay in settlement, disputes about premium or policy terms, and non-issuance of documents. An Ombudsman award is binding on the insurer. The policyholder may accept or reject it. We advise policyholders on when the Ombudsman route is appropriate and represent them in Ombudsman proceedings.

Health Insurance: Coverage, Exclusions, and Disputes

Health insurance disputes have increased significantly as coverage has expanded and as insurers have become more aggressive in scrutinising claims. Common areas of dispute include rejection of cashless claims on the ground that the treating hospital is not on the approved network, repudiation of claims for pre-existing diseases not disclosed at proposal stage, disputes about whether a condition is specifically excluded, co-payment disputes, and the application of sub-limits on specific treatments.

Pre-Existing Disease and Waiting Periods

The IRDAI (Insurance Products) Regulations, 2024 have standardised the treatment of pre-existing diseases in health insurance. A pre-existing disease is any condition for which the insured received treatment or was diagnosed in the 48 months before the policy inception. IRDAI has capped the waiting period for pre-existing diseases at 36 months for standard health products, meaning that after three continuous years of coverage, no pre-existing disease exclusion can apply. Insurers who attempt to apply exclusion periods beyond what IRDAI regulations permit are acting contrary to the regulations.

Corporate Health Insurance

Corporate group health policies cover employees and their dependants. The employer is the policyholder and the employees are the insured. Disputes arise about the scope of coverage, the process for adding and removing members, the treatment of claims during policy renewal gaps, and the insurer's right to increase premiums significantly on renewal after a high claims year. We advise corporates on negotiating group health policy terms and on resolving disputes with group health insurers.

General Insurance: Property, Liability, and Marine

Property Insurance Claims

Property insurance covers damage to buildings, plant, machinery, stock, and other assets from specified perils including fire, flood, earthquake, and theft. When a large property claim arises, the insurer appoints a licensed surveyor and loss assessor to investigate and quantify the loss. The surveyor's report is a critical document in any property insurance dispute. We review surveyor reports for the insured and advise on challenging findings that are factually wrong, based on wrong principles of valuation, or that fail to account for the actual replacement cost of the damaged assets.

Liability Insurance

Liability insurance covers an insured against claims made by third parties. Product liability, professional indemnity, directors and officers liability, and public liability are the most commercially significant liability insurance lines. The trigger for coverage, the duty to defend, the right to control the defence, and the treatment of settlements without the insurer's consent are the most common sources of disputes between insured and insurer in liability coverage situations. We advise insured parties on their coverage position when a liability claim is made and represent them in disputes with their liability insurers about coverage and defence obligations.

Marine Insurance

The Marine Insurance Act, 1963 governs contracts of marine insurance for ships, cargo, and freight. Marine insurance law is heavily influenced by English admiralty law and London market practice, and marine insurance disputes frequently involve questions about seaworthiness, the Institute Cargo Clauses applicable to the policy, abandonment and constructive total loss, and the obligations of the assured to minimise loss after a casualty. Marine cargo claims involving containerised goods, bulk cargo, and project cargo are handled by our team with understanding of both the legal framework and the shipping industry context.

Insurance Intermediaries: Brokers, Agents, and Corporate Agents

Insurance intermediaries, including brokers, corporate agents, and web aggregators, are licensed by IRDAI and are subject to conduct obligations that include acting in the best interest of the client, maintaining confidentiality, and avoiding conflicts of interest. The IRDAI (Brokerage) Regulations, 2018 set out the specific requirements for insurance brokers, including minimum net worth, professional indemnity insurance, and the prohibition on receiving compensation from both the insurer and the client for the same transaction.

Disputes between intermediaries and their insurer principals, disputes between intermediaries and their clients about the adequacy of coverage placed, and IRDAI enforcement actions against intermediaries for regulatory breaches are all matters we handle. We advise intermediaries on their compliance obligations and defend them in IRDAI proceedings and before consumer forums when clients complain about the coverage they were sold.

Reinsurance

Reinsurance is the mechanism through which insurers transfer part of their risk to other insurers or specialised reinsurance companies. The primary reinsurer in India is GIC Re, the state-owned national reinsurer, which has the right of first refusal on all reinsurance placed by Indian insurers. Foreign reinsurers can establish Indian branches with IRDAI approval and compete for Indian reinsurance business.

Reinsurance disputes involve the cedant insurer on one side and the reinsurer on the other. The most common issues are whether a particular loss falls within the scope of the reinsurance treaty, the allocation of large losses across multiple reinsurance layers, the impact of policy conditions in the original insurance on the reinsurer's obligation, and the follow-the-fortunes doctrine under which a reinsurer is generally bound by the cedant's good faith settlement of original claims. International reinsurance arrangements are often governed by English law and subject to London arbitration, requiring us to coordinate with English counsel on cross-border reinsurance disputes.

InsurTech: The Emerging Regulatory Frontier

Technology is changing insurance faster than the regulatory framework has been able to accommodate. Usage-based motor insurance products that price premiums based on telematics data, embedded insurance distributed through e-commerce and fintech platforms, parametric insurance products that pay on the occurrence of a defined event rather than a proven loss, and AI-driven underwriting that analyses non-traditional data to price risk are all areas where IRDAI is actively developing its regulatory position.

IRDAI has introduced a regulatory sandbox framework that allows InsurTech companies to test innovative products and distribution models with regulatory permission and within a defined scope and timeline. We advise InsurTech companies on structuring their products and business models to fit within the existing regulatory framework or to qualify for sandbox testing, on IRDAI licence applications, and on the compliance obligations that apply once a product is approved for launch.

Why Diwan Advocates for Insurance Law?

Legislative Reference Index

An insurance policy is a promise. When that promise is broken, the policyholder deserves a lawyer who knows how to enforce it.

When an insurer needs to manage its regulatory obligations or defend against a fraudulent claim, it deserves the same quality of advice.

Diwan Advocates delivers both.

Diwan Advocates  |  Delhi, India