The insurance Ombudsman is an alternative dispute resolution forum set up to
resolve disputes relating to insurance contracts. Established in 2000, under the
Public Grievance Redressal Rules of 1998, this Forum has served as a simple and
free dispute resolution mechanism for insurance customers. This article examines
the role, scope, and effectiveness of this forum and makes suggestions for a
more effective role in resolving insurance disputes.
The institution of the Insurance Ombudsman was initially created by the Public
Grievances Redressal Rules 1998, notified by the Central Government in the
exercise of its powers under Section 114(1) of the Insurance Act. These rules
were later replaced by the Insurance Ombudsman Rules in 2017 with some
amendments in 2018 and 2021.
These rules apply to intermediaries including insurers, agents, and brokers
in respect of complaints regarding the following:
- personal insurance line, or
- Group Insurance Policies
- Policies issued to individuals, sole proprietors, and micro enterprises.
The operation of the Insurance Ombudsman is facilitated by the Council of
Insurance Ombudsman. The Council is an insurance industry body composed of
members representing the life, general, and health insurance sectors of the
insurance industry and includes a representative from IRDAI.
appoints the Insurance Ombudsman on the basis of the recommendations of a
Selection Committee consisting of representatives of IRDAI, the Central
Government, and consumer interests. The tenure of Lokpal is for a period of
three years. At present, there are 17 Lokpal offices spread across the country,
whose jurisdiction includes all the states and union territories of India.
Scope of authority:
The Insurance Ombudsman receives and looks into complaints of lack of required
performance by the insurer, its agents, intermediaries, and brokers for reasons
such as delayed claim settlement, claim rejection, and insurance contract
disputes. Only those complaints which are initially raised with the insurers
concerned shall be placed before the Ombudsman.
Unlike other forums such as consumer courts, the Ombudsman Regulations do not
prescribe pecuniary jurisdiction. Clause 17(3) of the Rules provides that the
Ombudsman cannot award compensation exceeding Rs. 30 Lakhs. This amount
compares well with the Bank Ombudsman's limit of Rs. 2 Lakhs.
Banking Ombudsman Scheme clarifies by virtue of Section 12(5) that the
compensation that the Banking Ombudsman may award shall be independent of the
amount involved in the dispute. In the absence of any such express provision
in the Insurance Ombudsman Rules, there is a lack of clarity as to whether the
Ombudsman can entertain disputes above Rs. 30 lakhs, limiting the award to Rs.
30 lakhs, or consider only those disputes within this limit.
Insurance Grievance Redressal Mechanism:
The Guidelines for Redressal of Grievances by Insurance Companies, issued by
IRDAI, define "complaint/complaint" as "any communication". Who express
dissatisfaction about the action or lack of action regarding the level of
service/lack of service of an insurer and/or an intermediary, or request for
corrective action". When an insured person withdraws from the activities of the
insurer and feels aggrieved, he should first approach the insurer for redressal.
This provision is in line with the principle of primary jurisdiction, which
states that if a matter is of such a nature that it requires a determination by
an expert and specialized administrative body First aid should be obtained from
that body before hearing. An appeal. Applied to the courts of justice. The
different ways of redressing insurance complaints are as follows:
- In-house Grievance Redressal Mechanism
Under the provisions of the Insurance Regulatory and Development Authority
(Protection of Insured Interests) Regulations, 2017, mandatory for all
insurer effective processes and mechanisms for efficiently handling complaints
and claims of the insured. As a result, an aggrieved policyholder first has to
knock on the door of the insurer concerned to get redressal in the form of an
internal grievance mechanism.
The insurer in question has to settle the matter
fairly and reasonably. In addition, every insurer should have a designated
Grievance Officer at the senior management level. Senior Management shall mean
the Director General or Compliance Officer of the Company.
Any office other than the Head Office/Corporate/Head Office of the insurer shall
also have a designated Grievance Officer for that office. Every insurer is
entitled to have at each of its offices a system and procedure for the
reception, registration, and disposal of complaints. Insurers are free to set
their own response time, but they must ensure that the following minimum
timelines are met:
From the insurer's side, the maximum period for resolving the matter is two
weeks only. IRDAI will impose a ban if an insurer does not follow the above
procedures and timelines. Similarly, it is expected that the policyholder
protection committee will be constituted by the insurers to receive and analyse
the reports required by the management. In addition to the above, insurers are
expected to put in place a system to receive and handle all types of calls
including voice/email calls relating to complaints from potential customers.
The system should enable and facilitate the necessary interface with the IRDAI
system for handling insured calls/emails.
- An insurer should send a written acknowledgment of receipt, which should
- Send the name and designation of the officer who will deal with the
complaint to the complainant within three working days.
- Receipt of the complaint. need to be recognized in addition.
- Contains details of the insurer's complaint procedure and the time
required for dispute resolution.
- But if the insurer settles the claim within three days, it may intimate
the settlement with acknowledgment of receipt.
- If the claim is not resolved within three business days, the insurer
should resolve the claim within two weeks of receipt of the claim and send a
final resolution letter.
- Insurance Regulatory and Development Authority of India (IRDAI)
IRDAI, with the mission to "protect the interests of the insured, regulate,
promote and ensure the orderly development of the insurance industry" also it
lets the insured get the damage repaired but does not solve the accident itself.
Currently, IRDAI has the following systems in place to facilitate repairs:
This will provide an effective tool in the hands of IRDAI for monitoring
complaints. Thus, it can be said that IRDAI has provided an effective platform
to protect the interests of the insured.
- IRDAI Grievance Redressal Centre: Aggrieved insured can register his/her
complaint by calling on the toll-free number or by sending an email.
- Integrated Claims Management System: It is an online consumer claims
registration system through which claims are submitted simultaneously to IRDAI
and the concerned insurer on a turn-by-turn basis.
- Civil Courts
For redressal of grievances, the insured can also take recourse to courts of
law. As is well known, in the common law system, deciding a case as per legal
procedure is very time consuming and costly which may lead to undue delay.
Therefore, it can be said that this resource will not be of much use in the case
of insurance, where the insured needs prompt, cost-effective, efficient and
unbiased complaint resolution.
- Consumer Protection Forums
Since insurance is a 'service' as per the Consumer Protection Act of 1986, the
insured can approach a consumer forum for the redressal of grievances. A lot of
cases have been decided by the consumer forums on this subject. Redressal under
this Act is said to be very simple, fast, and cheap, but the Law Commission of
India has stated that "under the Consumer Protection Act 1986, the remedy is no
longer quick or effective.
- Insurance Ombudsman
The word 'ombudsman' is of Swedish origin and is used for a person who listens
to the problems of the common people. The ombudsman is supposed to receive and
investigate complaints against government departments and public offices. In
India too, this organization has attracted the attention of common people due to
being a transparent and corruption-free resource. Sectors of Banking, Telecom,
etc. They already have Lokpal.
In the field of insurance, the institution of the
Insurance Ombudsman was created by the Redressal of Public Grievances Rules,
1998 (RPG Rules). These rules apply to all insurance companies engaged in the
general and life insurance business.
At present, there are 17 Insurance
Ombudsman Centres at various places in India:
Ahmedabad, Bengaluru, Bhopal,
Bhubaneshwar, Chandigarh, Chennai, Delhi, Ernakulam, Guwahati, Hyderabad, Jaipur,
Kolkata, Lucknow, Mumbai, Noida, Patna, and Pune. Some ombudsmen have
jurisdiction over more than one state and some states have two ombudsman centres.
For example, for some districts in the state of Uttar Pradesh, the Lucknow
Lokpal has jurisdiction and for other districts, the Noida centre has
jurisdiction. The Guwahati centre of the Lokpal has jurisdiction over seven
'Insurance Ombudsman' is an institution to resolve all complaints relating to
the settlement of claims by insurance companies in a cost-effective, efficient
and fair manner. In simple words, it is believed that the Ombudsman, behind
every insurance policy, is always ready to hear complaints against insurers.
"The whole purpose of appointing Lokpal is to check abuse of power by statutory
bodies and to ensure that disputes are resolved." The Delhi High Court has also
said that the institution of Insurance Ombudsman is an independent institution
and Quasi-judicial forum for the redressal of grievances of any individual
against an insurer.
Insurance Ombudsman: Eligibility, Appointment, Tenure, and Jurisdiction
A person who has experience or experience in the industry, civil service,
administrative service, judicial service, etc. May be appointed by the Governing
Body from a panel prepared by a committee composed of the following:
- Chairman of IRDAI - Chairman
- two representatives of the Insurance Council, one from the life
insurance business and one from the general insurance business, members
- a representative of the Central Government-Member
The discretion to decide the number of Ombudsman rests with the Governing Body.
The term of Lokpal is three years or till the incumbent reaches the age of 65
years, whichever is earlier, but re-election is not allowed. City guards can be
removed from their duties for serious misconduct committed during their mandate.
Procedure before Insurance Ombudsman:
When an insurer does not satisfy the complaints of an aggrieved person, the
aggrieved person himself or through his legal heir may approach the Ombudsman
for the insured with a written complaint addressed to the Ombudsman within whose
jurisdiction the branch of the insurer or The office is located.
You cannot lodge a complaint with the Ombudsman unless:
- must be signed by the aggrieved person or his legal heir
- clearly state the name and address of the complainant
- clearly mention the name of the branch or office of the insurer against
whom the complaint is lodged
- Mention the fact which gives rise to the complaint
- be supported by documents, if any, on which the claimant relies
- state the nature and extent of the loss suffered by the claimant
- clearly mention the compensation requested by the Ombudsma
- where the claimant had made a written statement to the insurer named in
the complaint before lodging the complaint with the Ombudsman and the
insurer rejected the complaint or the claimant had not received a response
within a period of one month thereafter, the insurer Received his
representation in question or the claimant is not satisfied with the reply
given by the insurer.
- the claim is not filed after one year from the time the insurer rejected
the representation or sent its final response to the claimant's
- the complaint is not in respect of the same matter for which any
proceedings are pending or were pending before any court, or consumer forum,
The Ombudsman is free to adopt a procedure for dealing with a claim and may call
for necessary documents from the parties in support of their respective claims
and may, when considered necessary, collect factual information available from
the insurance company.
In this regard, the Hon'ble Delhi High Court has also
held that the Insurance Ombudsman is inter alia empowered to receive and
consider complaints regarding delays/disputes relating to the settlement of
claims. By virtue of Rule 14 of the said Regulation, the Ombudsman for the
Insured Person may adopt any procedure other than the procedure mentioned in
Rule 13 for attending to the claim. In accordance with the principles of natural
justice, you must deal with a complaint fairly and equitably.
The Ombudsman is the final authority with regard to the merits of a complaint
and the origin of its consideration or not.
The Ombudsman has the power to
receive and consider:
- Complaints under Rule 13
- any partial or complete denial of
claim from an insurer
- Any dispute regarding the premium paid
or payable under the policy terms
- any disputes over the legal interpretation of the policies to the
extent such disputes relate to claims.
Can the Insurance Ombudsman take evidence in disposing of the complaint?
There are different points of view on this issue. Some courts have ruled that
the Ombudsman cannot take evidence because he is not a court, but other courts
have held that he can take evidence.
As discussed above, Rule 14 empowers the Ombudsman to take evidence of any kind
for fair and just disposal of the complaint. The Hon'ble High Court of Kerala
has considered the scope of powers under Rule 14, where the Court observed that
the Rule does not exclude the power of the Ombudsman to take evidence of any
kind. In fact, for a fair and just consideration of the case, the Ombudsman
should have the power to take evidence in appropriate cases.
In a particular
case, when it is necessary to separate oral evidence from documentary evidence
for arriving at a fair and just conclusion, the Ombudsman has the power to take
such evidence. Further, in another case, the Hon'ble Court held that the
Insurance Ombudsman is an authority before the people to produce evidence in
support of their claims.
The Insurance Ombudsman shall endeavour to settle the claim through his
arbitration and when the complaint is resolved, shall make such recommendations
as he deems fit in the circumstances of the case. A copy of the recommendation
will be sent to both parties. When the claimant accepts the written
recommendation clearly stating that the settlement reached is fully acceptable
to him, the Ombudsman shall request the insurer to comply with the terms of the
recommendations immediately but not later than 15 days from the date of receipt
of the recommendation.
When the claim is not resolved by mutual agreement, the Ombudsman shall, within
three months of receipt of the claim, issue a written and reasoned decision
expressing the amount awarded to the claimant, which he considers appropriate in
the light of the facts. and the circumstances of the claim. Accordingly, the
parties will be informed in writing of the award and the claimant will be
required to accept the award. If the claimant does not indicate acceptance, the
award cannot be enforced by the insurance company. In addition to the above, the
Ombudsman is also authorized to pay ex-gratia.
Insurance instruments, on the one hand, are considered to be an effective tool
for distributing the economic burden caused by any future uncertainty; On the
other hand, it is capable of making significant contributions and boosting the
country's economy, as well as having the potential to generate employment
opportunities. In order to protect the interests of policyholders, IRDAI has
launched initiatives to monitor complaints against insurers, etc.
have access to various avenues for the redressal of their grievances, but the
existing Insurance Ombudsman system has been found to be more effective and
faster in redressing grievances as compared to other modes of grievance
Some important suggestions to strengthen the existing grievance redressal
mechanism for the welfare of policyholders and insurance companies may be given
- The internal grievance redressal mechanism available with the insurers should
be equipped with modern facilities so that effective and prompt redressal is
provided to the aggrieved policyholders. For this, the details of complaints can
be uploaded and updated by the insurers on the website of IRDAI.
- High-Value Commercial Disputes maybe related to insurance or
reinsurance. Under the provisions of the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Bill, 2015, if
enacted by the Parliament of India, should be dispensed with expeditiously,
fairly, and at a reasonable cost.
- Should have adequate training insurance agents are the link between
insurance companies and policyholders. In general, insurance agents have
been found to have made mistakes, either intentionally or unintentionally,
in underwriting insurance policies.
- As observed and suggested by most of the insurance advocates in the
Annual Report of the Insurance Council governing body, there is a great need
to increase awareness among the policyholders about the terms and conditions
of the policy. In order to increase awareness among policyholders, insurance
companies should organize at least one half-yearly meeting in their
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