INSURANCE OMBUDSMAN SCHEME: AN EFFECTIVE MEASURE

According of Mariam-Webster dictionary, an ombudsman is a government official appointed to receive and investigate complaints made by individuals against abuses or capricious acts of public officials. An Ombudsman is an authority who is empowered to investigate individual complaints against public authorities, departments, etc.  The government of India has designated several Ombudsmen (sometimes-called Chief Vigilance Officer or CVO) for the redressal of grievances and complaints from individuals in the banking, insurance and other sectors being serviced by both private and public bodies and corporations.

The Government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way created the Insurance Ombudsman scheme. There are at present 17 Insurance Ombudsman in different locations and any person who has a grievance against an insurer, may himself or through his legal heirs, nominee or assignee, make a complaint in writing to the Insurance ombudsman within whose territorial jurisdiction the branch or office of the insurer complained against or the residential address or place of residence of the complainant is located.

The aim of the insurance ombudsman scheme was quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances to protect the interests of policyholders and build their confidence in the insurance system. Insurance ombudsman has two types of functions to perform – conciliation and award making. The insurance ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance, group insurance policies, policies issued to sole proprietorship and micro enterprises.

The Redressal of Public Grievance Rules, 1998 (RPG Rules, for short) provide for selection and appointment, jurisdiction and power of Insurance Ombudsmen and the manner of settlement of disputes by the Ombudsman. As per the RPG Rules, the Insurance Ombudsmen are selected from among the personnel of the insurance industry, judiciary and administration, who have retired at senior levels in their respective areas. The selection is made by a high-powered committee headed by the Chairman, IRDA. After the selection by the committee, the Governing Body of the Insurance Council, which is a collective body of all the insurance companies, appoints the Ombudsmen. The Ombudsmen are appointed for a fixed tenure of 3 years.

The procedure for filing a complaint before the Ombudsman is simple. The hearing is conducted in an informal manner where procedure is kept to the bare minimum. Here again, professional assistance is not required. The decision on the complaint is rendered quickly. After obtaining the decision of the Ombudsman, the consumers have the choice to accept the decision or reject it. If the complainant rejects the decision, other legal remedies are not affected. However, once the complainant accepts the decision, the Insurer shall comply with the Award within 30 days from the date of receipt of the Award and intimate of its compliance to the Insurance Ombudsman.

The complaint shall be made in writing on a plain, duly signed by the complainant and shall state clearly the following things-

1. name and address of the complainant
2. name of the branch or office of the insurer against whom the complaint is made
3. the facts giving rise to the complaint
4. supported documents if any
5. the nature and extent of the loss caused to the complainant
6. The relief sought from the Insurance Ombudsman.

 

No complaint to the Insurance Ombudsman shall lie unless the complaint is made within one year –

1. From the date of receipt of the order of the insurer rejecting the representation.
2. From the date of receipt of decision of the insurer which is not to the satisfaction of the complainant;
3. After expiry of a period of one month from the date of sending, the written representation to the insurer if the insurer named fails to furnish reply to the complainant.

 

The complaint must relate to-

(a) Delay in settlement of claims, beyond the time specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999;

(b) Any partial or total repudiation of claims by the life insurer, General insurer or the Health insurer;

(c) Disputes over premium paid or payable in terms of insurance policy;

(d) Misrepresentation of policy terms and conditions at any time in the policy document or policy contract;

(e) Legal construction of insurance policies in so far as the dispute relates to claim;

(f) Policy servicing related grievances against insurers and their agents and intermediaries;

(g) issuance of life insurance policy, general insurance policy including health insurance policy which is not in conformity with the proposal form submitted by the proposer;

(h) non-issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance; and

(I) any other matter resulting from the violation of provisions of the Insurance Act, 1938 or the regulations, circulars, guidelines or instructions issued by the IRDAI from time to time or the terms and conditions of the policy contract, in so far as they relate to issues mentioned at clauses (a) to (f).

 

The scheme has proved to be very effective and the procedure has been made very simple which is easily available and adaptable for the people of all walks of life.