Most airlines fare rules allow a refund in the event of death of passenger or a close relative or travel companion.
I would have expected a little more sympathy and I know that when I worked for airlines, and it was my decision, I gave refunds under this circumstance, on production of a death certificate.
“My grandparents have been using Norwegian airlines for 30 years”
No they haven’t, not that it makes much difference, but the airline has been operating in its own right only since about 1993. Before that they probably flew on SAS or Braathens.
I would suggest that a polite but firm and non-judgemental letter to the airline’s head office might produce a positive outcome. I hope so. Send a copy of the death certificate so that they don’t have to ask you for it.