Customer Protection & Insurance Ombudsman

For providing protection to Indian consumers against malpractices and gullible brokers who are out to fleece the customers by raking in quick profits, IRDA has appointed Ombudsman in 12 cities across India to specifically deal with Insurance Grievances and speedy disposal of such cases. In case if a policyholder is dissatisfiedby the outcome or the decision taken by the Insurance Company, such an individual has the liberty to approach the Insurance Ombudsman as a last resort after exhausting various options. Each Ombudsman has been empowered to redress customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs. 20 lakhs, in accordance with the Ombudsman Scheme. Addresses of Ombudsman can be obtained from the offices of LIC and other insurers (or Insurance Companies).

Insurance Ombudsman

The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of the grievances of the insured customers (or policyholders) and to mitigate their problems involved in redressal of such customer grievances. This institution is of great importance and relevance for protecting the interests of policyholders as well as generating public confidence in the Insurance system and its associated processes. The institution has helped to generate and sustain the faith and confidence amongst the consumers and insurers across India.

IRDA has set up Ombudsman offices across 12 cities in India. Each ombudsman is empowered to redress customer grievances and complaints in respect of insurance contracts on personal lines where the insured amount is less than Rs 20 lakhs, in accordance with the guidelines of Ombudsman Scheme as specified in IRDA Act.

The offices of twelve Insurance Ombudsmen across India are located at following cities:

(1) Bhopal

(2) Bhubaneswar

(3) Cochin (Ernakulam)

(4) Guwahati

(5) Chandigarh

(6) New Delhi

(7) Chennai

(8) Kolkata

(9) Ahmedabad

(10) Lucknow

(11) Mumbai

(12) Hyderabad

The Ombudsman may hold sitting at various places within the area of their respective jurisdictions in order to expedite disposal of complaints in a swift and amicable manner.

Appointment of Insurance Ombudsman

The governing body of insurance council issues orders pertaining to the appointment of Insurance Ombudsman on the recommendations of the committee comprising of Chairman - IRDA, Chairman - LIC, Chairman - GIC and a representative of the Central Government. Under Section 40 C of the Insurance Act, 1938, Insurance council comprises of members of both - the Life Insurance Council and General (Non-Life) Insurance Council, who are representatives of insurance companies.

Eligibility

Individuals for Insurance Ombudsman are drawn from Insurance Sector, Civil Services and Judicial Services, who are renowned and distinguished in their respective fields with a clean public image not embroiled in any controversy.

Terms of office

An Insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of 65 years, whichever is earlier. Re-appointment is not permitted under the IRDA Act.

Office Management

The Ombudsman has a secretarial staff provided by the insurance council to assist him/her in discharging his duties in an efficient and prudent manner. The total expenses incurred on Insurance Ombudsman and staffs are incurred by the Insurance companies who are the members of the insurance council in such proportion that may be decided by the governing body – IRDA. It must be noted that members of insurance council are accorded official recognition by IRDA.

Removal from office

An Ombudsman may be removed from service for gross misconduct committed by him/her during his office tenure. The governing body may appoint any such individual that it thinks fit to conduct an enquiry with respect to the misconduct of the Ombudsman. All enquiries on misconduct will be sent to IRDA (Insurance Regulatory and Development Authority) which may take a suitable decision pertaining to the proposed action to be initiated against the Ombudsman. On the recommendations of IRDA, the Governing Body may terminate his/her services, in case found guilty.

Power of Ombudsman

Insurance Ombudsman mainly performs two types of functions as follows:

(1) Conciliation

(2) Award making

The Insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any individual or policyholder who has any grievance against an insurer. The complaint may relate to any grievance against the insurer as enlisted below:

(a) Any partial or total repudiation of claims by the insurance companies

(b) Dispute with regard to premium paid or payable in terms of the policy

(d) Undue delay in settlement of insurance claims and

(e) Non-issuance of any insurance document to customers after receipt of premium.

(f) Disputes arising on account of Claims Reimbursement for eg. excessive deductions that are made

However, an Ombudsman's powers are restricted to insurance contracts of financial value not exceeding Rs. 20 lakhs. The insurance companies are required to honour the awards passed by an Insurance Ombudsman within three months, based on the merit and validity of an individual claim on case-to-case basis.

Manner of Lodging Insurance related Complaints

An aggrieved person can lodge the complaint in writing which is addressed to the Insurance Ombudsman of the jurisdiction under which the office of the Insurer (or Insurance company) falls. The complaint can also be lodged through the legal heirs of the insured policyholder. Before lodging a complaint with the Ombudsman, the following features should be kept in mind:

i) The complainant or aggrieved should have made a representation to the insurer named in the complaint.

ii) The insurer should have either rejected the complaint or if the complainant (or aggrieved policyholder) has not received any reply from the concerned insurance company within a period of one month upon receiving the complaint or the individual is not satisfied with the reply of the insurer.

iii) The complaint is not made later than one year after the insurer had replied in response to his/her queries.

iv) An aggrieved policyholder should not have approached any court, consumer forum or arbitrator before pertaining to the same case.

Recommendations made by the Ombudsman

When a complaint is settled through the mediation of the Ombudsman, he/she shall make the recommendations which he feels and thinks is fair based on the merits, validity and circumstances of each case without any bias. Such a recommendation shall be made by the Ombudsman not later than one month upon hearing the case and copies of the same will be dispatched to the complainant and the insurance company concerned, who are the parties to this dispute. If the complainant or aggrieved policyholder accepts the recommendations, he/she needs to send a communication in writing within 15 days from the date of receipt by accepting the settlement.

Award

The Ombudsman shall pass an award within a period of three months from the receipt of receiving the complaint. The awards passed by the Insurance Ombudsman are final and binding upon the insurance companies.

Incase, if the policyholder is not satisfied with the award of the Ombudsman, he/she has the option of approaching other venues like Consumer Forum and Courts of Law for redressal of grievances.

Based on the regulations pertaining to protection of policy-holders, every Insurer (or Insurance Company) shall inform the policyholder accompanied with the policy document in respect of the Insurance Ombudsman in whose jurisdiction his/her office falls. This is for the purpose of grievances redressal, if any, that may arise during the process.

A recent analysis depicting steady increase in number of complaints/grievances received by various offices of Ombudsman across India implies that the policyholders are reposing their confidence in the institution of Insurance Ombudsman and IRDA.