Insurance Ombudsman: Grievance Redressal Mechanism

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[1].

1. personal insurance line, or
2. Group Insurance Policies
3. Policies issued to individuals, sole proprietors, and micro enterprises.

The Council 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[3].

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[4]. 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[5]. This amount compares well with the Bank Ombudsman's limit of Rs. 2 Lakhs.

However, the 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[6]. 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[7].

Insurance Grievance Redressal Mechanism:

The Guidelines for Redressal of Grievances by Insurance Companies, issued by IRDAI, define "complaint/complaint" as "any communication[8]". 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.

In-house Grievance Redressal Mechanism
Under the provisions of the Insurance Regulatory and Development Authority (Protection of Insured Interests) Regulations, 2017[9], 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[10].

• An insurer should send a written acknowledgment of receipt, which should include:
  
  • 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.
    
  1. IRDAI Grievance Redressal Centre: Aggrieved insured can register his/her complaint by calling on the toll-free number or by sending an email.
  2. 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.

  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.

  "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

  1. Chairman of IRDAI - Chairman
  2. two representatives of the Insurance Council, one from the life insurance business and one from the general insurance business, members respectively
  3. a representative of the Central Government-Member

  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.

  1. must be signed by the aggrieved person or his legal heir
  2. clearly state the name and address of the complainant
  3. clearly mention the name of the branch or office of the insurer against whom the complaint is lodged
  4. Mention the fact which gives rise to the complaint
  5. be supported by documents, if any, on which the claimant relies
  6. state the nature and extent of the loss suffered by the claimant
  7. clearly mention the compensation requested by the Ombudsma
  1. 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.
     
  2. 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 representation.
     
  3. 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, or arbitrator.

  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.

  • 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.

  Conclusion:
  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.

  Policyholders 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 redressal mechanism.

  • 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 branches.
  1. Saba, Insurance Ombudsman Rules 2017 notified, Published on 4th May, 2017, https://www.scconline.com/blog/post/2017/05/04/insurance-ombudsman-rules-2017/.
  2. Segar Sampathkumar, Insurance Ombudsman in India - A Commentary, Bimaquest Vol 21, Issue 2, May 2021
  3. Jurisdiction And Functions Of Lokpal, Last accessed Tuesday, November 22, 2022 21:34, https://www.lokpal.gov.in/?about_us?Jurisdiction_and_Functions_of_Lokpal?0103
  4. Department of Financial Services, Ministry of Finance, Brief on Insurance Ombudsman, Last accessed 22-11-2022, 21:39, https://financialservices.gov.in/insurance-divisions/Brief-on-Insurance-Ombudsman
  5. Ibid
  6. Tojo Josh, What is Banking Ombudsman Scheme?, May 13, 2018, https://www.indianeconomy.net/splclassroom/banking-ombudsman-scheme/
  7. Ibid
  8. Want to raise a complaint against an insurance company?, Last Updated: Oct 25, 2018, 04:07 PM IST, ( Originally published on Mar 06, 2017 ), https://economictimes.indiatimes.com/wealth/insure/how-to-raise-a-complaint-against-insurance-company/articleshow/57452692.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
  9. IRDAI, Home, regulation, https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo3191&flag=1, file:///C:/Users/pranjal/Downloads/177130%20GN.pdf
  10. Ibid
  11. IRDAI, Home, regulation, Guidelines on COVID Standard benefit-based health policy, https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4166&flag=1
  12. Ibid
  13. Insurance Regulatory and Development Authority of India, Last accessed 22:13, https://www.irdai.gov.in/

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