Insurance Ombudsman

The insurance ombudsman is a quasi-judicial body that resolves disputes between policyholders and insurance companies. It was established under the Insurance Ombudsman Rules, 2002. The ombudsman is appointed by the General Insurance Council (GIC) on the recommendation of a committee comprising representatives from the Life Insurance Corporation of India (LIC), the Insurance Regulatory and Development Authority (IRDA), the General Insurance Corporation of India (GIC), and the Central Government.

The insurance ombudsman is drawn from the insurance industry, judicial, and civil services. The term of office is three years or until the incumbent attains the age of 65 years, whichever is earlier. Re-appointment is not permitted.

The insurance ombudsman has jurisdiction over disputes relating to insurance policies issued by insurers registered with the IRDA. The ombudsman can award compensation of up to Rs. 20 lakhs in individual cases and up to Rs. 1 crore in class action cases.

The insurance ombudsman has been instrumental in generating and sustaining faith and confidence among insurers and customers. Presently, insurance ombudsman centers are widespread across the country at 17 different locations.

Eligibility

To be eligible for appointment as an insurance ombudsman, a person must:

• Be a citizen of India.
• Have a degree in law, economics, commerce, or a related field.
• Have at least 10 years of experience in the insurance industry, judicial, or civil services.
• Be of impeccable integrity and reputation.

Terms of Office

The insurance ombudsman is appointed for a fixed term of three years or until the incumbent attains the age of 65 years, whichever is earlier. Re-appointment is not permitted.

Office Management

The ombudsman’s office has a secretarial staff assigned by the insurance council. This staff assists the ombudsman in carrying out their duties.

The insurance companies that are members of the insurance council cover all expenses related to the ombudsman and their staff.

Removal from Office

The ombudsman can be removed from office for gross misconduct committed during their term. In such cases, the governing authority appoints a suitable person to investigate the misconduct.

The misconduct inquiries are then forwarded to the IRDA, which decides on the appropriate action against the ombudsman. Based on the IRDA’s recommendations, the governing body may terminate the services of the ombudsman if found guilty.

Powers of the Insurance Ombudsman

The insurance ombudsman is responsible for the following functions:

1. Conciliation: The ombudsman attempts to resolve disputes between policyholders and insurance companies through conciliation.

2. Award Making: If conciliation fails, the ombudsman has the authority to make awards in favor of the policyholder.

The ombudsman can receive and lodge complaints related to personal lines of insurance from individuals who have grievances against insurance companies.

Insurance Ombudsman

The insurance ombudsman is a quasi-judicial body that addresses grievances against insurance companies. It handles complaints related to:

• Partial or total repudiation of claims by an insurer
• Disputes regarding premiums paid or payable
• Legal interpretation of policies as they relate to claims
• Delays in claim settlement
• Non-issuance of insurance documents after receiving premiums

The ombudsman’s jurisdiction is limited to insurance policies with a value not exceeding INR 20 lakhs. Insurance companies are required to honor the awards passed by the insurance ombudsman within three months.

**When to Approach the Insurance Ombudsman with Complaints

• The insurance company has rejected the prior complaint and did not resolve it to the insured’s satisfaction.
• The insurance company did not respond to the complaint at all for 30 days.
• The complaint pertains to any policy taken in the capacity as an individual.
• The value of the claim, including expenses claimed, is not above INR 30 lakhs.

The complaints made in the above cases should be in writing as per the insurance ombudsman complaint format. Besides, the complaint must be filed within one year of the complaint rejection by the insurance company.

Lodging a Complaint with Insurance Ombudsman

An aggrieved person must write a complaint, addressing it to the insurance ombudsman of the jurisdiction under which the office of the insurance company falls. The legal heirs of the insured can also lodge the complaint. Before lodging a complaint:

• Ensure that you have a copy of the insurance policy, the claim form, and any other relevant documents.
• Write a clear and concise complaint, stating the facts of the case and the relief sought.
• Attach copies of all relevant documents to the complaint.
• Send the complaint by registered post or speed post to the insurance ombudsman.

The insurance ombudsman will then investigate the complaint and try to resolve it amicably between the parties. If the complaint is not resolved, the ombudsman may pass an award, which is binding on the insurance company.

Insurance Ombudsman and Claim Settlement

The insurance ombudsman plays a crucial role in resolving disputes between policyholders and insurance companies. The process of claim settlement by the ombudsman involves recommendations and awards.

Recommendations of the Ombudsman

When a complaint is settled through the insurance ombudsman, the ombudsman makes recommendations that they deem fair and appropriate for the case. These recommendations should be made within 30 days, and copies are sent to both the aggrieved party and the insurance company.

If the aggrieved party accepts the recommendations, they must send a written communication within 15 days of receiving the settlement.

Award

If the aggrieved party does not accept the recommendations or the insurance company fails to comply with the recommendations, the insurance ombudsman can pass an award. The award is binding on the insurer and must be passed within three months of receiving the complaint from the insured.

If the insured is not satisfied with the Ombudsman’s award, they can approach other authorities like consumer forums and courts of law for grievance redressal.

Policyholder Protection

Every insurer must inform the insured about the insurance ombudsman in whose jurisdiction their office falls for grievance redressals. This information should be provided along with the policy document.

The increasing number of complaints received by different insurance ombudsmen indicates that policyholders are placing their trust in the scheme.

Additional Resources

• Types & Principles of Insurance
• Para Banking study notes