MINISTRY OF FINANCE
(Department of Financial Services)
(INSURANCE-II SECTION)
NOTIFICATION
New Delhi, the 22nd December, 2020
G.S.R. 788(E).—Draft rules to amend the Insurance Ombudsman Rules, 2017, which the Central Government proposes to make in exercise of the powers conferred by section 24 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), are hereby published for information of all persons likely to be affected thereby, and notice is hereby given that the said draft rules will be taken for publication in the Gazette of India after the expiry of a period of forty-five days from the date on which the copies of the draft rules are made available to the public.
Objections or suggestions, if any, from persons likely to be affected may be addressed to the Secretary, Ministry of Finance, Department of Financial Services, Jeevan Deep Building, 3rd floor, Sansad Marg, New Delhi – 110 001.
Objections or suggestions that may be received from persons likely to be affected with respect to the draft rules within the aforesaid period shall be considered by the Central Government.
DRAFT RULES
1. These rules may be called the Insurance Ombudsman (Amendment) Rules, 2020.
2. In the Insurance Ombudsman Rules, 2017 (hereinafter referred to as the said rules), for the words “Executive Council of Insurers”, the words “Council for Insurance Ombudsmen” shall be substituted wherever they occur.
3. In the said rules, in rule 4, in sub-rule (1), after clause (k), the following clause shall be inserted, namely:—
“(l) “complaints management system” means an online platform developed by the Council for Insurance Ombudsmen for the purpose of online submission and tracking of the status of complaints lodged with any office of Ombudsman.”
4. In the said rules, in rule 7, —
(i) for sub-rule (3), the following sub-rule shall be substituted, namely:—
“(3) The Council for Insurance Ombudsmen shall appoint an Insurance Ombudsman after considering candidates recommended for appointment by a selection committee comprising—
(a) The Chairperson of IRDAI — Chairperson;
(b) One person drawn from among the non-official members of the Banks Board Bureau possessing necessary expertise and experience in matters relating to general insurance business — Member;
(c) One person drawn from among the non-official members of the Banks Board Bureau possessing necessary expertise and experience in matters relating to life insurance business — Member;
(d) One person possessing necessary expertise and experience in matters relating to consumer rights, to be associated from the Ministry or bodies concerned with consumer rights — Member; and
(e) One official of the Central Government in the Ministry of Finance, Department of Financial Services, not below the rank of a Joint Secretary to the Government of India or its equivalent — Member.
Explanation.—‗Banks Board Bureau‘ means the autonomous body named as such, set up by the Central Government for selection of whole-time directors of public sector insurance companies.”;
(ii) for sub-rule (4), the following sub-rule shall be substituted, namely:—
“(4) The Council for Insurance Ombudsmen shall issue public notice inviting applications for selection against each vacancy existing in the office of Insurance Ombudsman at the beginning of each financial year and those likely to arise during the financial year, and shall appoint Insurance Ombudsman against each vacancy from among applicants meeting the eligibility criteria specified below, as per the selection procedure specified below:—
(a) The applicant should be not below 53 years and not more than 62 years as on the last date specified for receipt of applications in the public notice and should meet the following criteria:
Category 1: The applicant should be serving as, or should have served as,—
(i) a Judge of a High Court, or
(ii) a District Judge and should have presided over and supervised the affairs of the district judiciary, including administrative responsibilities in respect of the district judiciary, or
(iii) a Judge of a Motor Accident Claims Tribunal;
OR
Category 2: The applicant should be serving as, or should have served as, a member of an all-India service or a civil service of the Union of India, and should have held the post of a Joint Secretary to the Government of India or its equivalent in the Central Government;
OR
Category 3: The applicant should have served for at least 25 years in the insurance industry, with the last position held being not less than one level below that of a board director;
(b) The Council for Insurance Ombudsmen shall shortlist from among eligible applicants up to two candidates in each of the three categories enumerated in clause (a), on the basis of the length of service of the candidates in their respective category:
Provided that a Judge of a High Court shall be preferred over a District Judge or a Judge of a Motor Accident Claims Tribunal for purposes of the shortlisting:
Provided further that in case the number of candidates so shortlisted is less than four, additional candidates from among eligible candidates may be included in the shortlist on the basis of their length of service without restricting the number of candidates in a category to two, such that the total number of shortlisted candidates does not exceed six;
(c) Each shortlisted candidate shall be required to furnish, in such manner and form as the Council for Insurance Ombudsmen may specify,—
(i) a declaration and undertaking that if appointed as Insurance Ombudsman, he shall ensure absence of conflict of interest in the discharge of functions and duties of Insurance Ombudsman; and
(ii) information in respect of the following:
(A) Personal identification details, including income-tax Permanent Account Number, bank account numbers and Director Identification Number;
(B) Professional history, including directorships;
(C) Disclosure regarding criminal prosecution, if any;
(D) The financial interests, including beneficial ownership, of the candidate and his relatives;
(E) Organisational affiliations;
(F) Disclosure regarding the candidate or his relatives—
(I) being a promoter or director or employee of,
(II) having material pecuniary relationship with,
(III) being an employee or proprietor or partner in a firm of auditors, company secretaries or cost accountants of, or in a legal or consulting firm having material transactions with, and
(IV) being chief executive or director of any non-profit organisation that has material receipts from, an insurer or its holding, subsidiary or associate company;
(G) Disclosure regarding the candidate or his relatives holding shares in excess of two per cent. in, or being a material supplier, service provider or customer of, or being a lessor or lessee of, an insurer;
(d) The declaration, undertaking and information as in clause (d) shall be laid before the Council for Insurance Ombudsmen, which, after satisfying itself regarding the absence of conflict of interest in the event of the shortlisted candidate being appointed as Insurance Ombudsman, shall prepare the final shortlist of candidates for interaction by the selection committee;
(e) In respect of candidates figuring in the final shortlist who are public servants or officials falling within the scope of the powers and functions of the Central Vigilance Commission,—
(i) inputs shall be sought from the Insurance Regulatory Development Authority of India while sharing the information furnished by the candidate, and
(ii) the status of vigilance clearance shall be sought from the Central Vigilance Commission;
(f) In respect of candidates figuring in the final shortlist who are other than public servants or officials falling within the scope of the powers and functions of the Central Vigilance Commission, inputs shall be sought from the Insurance Regulatory Development Authority of India, the Directorates of Enforcement, Revenue Intelligence and Goods and Service Tax Intelligence, and the Central Board of Direct Taxes, while sharing with them the information furnished by the candidate;
(g) The selection committee shall, after giving candidates figuring in the final shortlist an opportunity for interaction, recommend to the Council for Insurance Ombudsmen a candidate for appointment against each vacancy in the office of Insurance Ombudsman, along with an additional candidate as reserve; and
(h) Inputs and status as in clauses (e) and (f) in respect of the candidates recommended by the selection committee shall be placed before the Council for Insurance Ombudsmen for its consideration for appointment as Insurance Ombudsman.
Explanation.—For the purposes of clause (b), the reckoning of length of service shall be, in respect of an applicant—
(i) who is serving as or has served as a Judge of a High Court or as a District Judge or as a Judge of a Motor Accident Claims Tribunal, from the date of first appointment as such Judge;
(ii) who is serving as or has served as a member of an all-India service or a civil service of the Union of India, from the date of first appointment as Joint Secretary to the Government of India or its equivalent in the Central Government; and
(iii) who has served in the insurance industry, from the date of first appointment to a position not more than one level below that of a board director in the insurance industry.”;
(iii) sub-rule (5) shall be omitted.”.
5. In the said rules, for rule 8, the following rule shall be substituted, namely:—
“8. Term of office of Ombudsman.—An Ombudsman shall be appointed for a term of three years and shall not be eligible for reappointment:
Provided that no person shall hold office as Ombudsman after he has attained the age of sixty-five years:
Provided further that every Ombudsman in office on the date of coming into force of the Insurance Ombudsman (Amendment) Rules, 2020, may continue to hold office for the term specified at the time of his appointment or till he attains the age of seventy years, whichever is earlier.”.
6. In the said rules, in rule 9, after the words “gross misconduct during the term of office”, the following shall be inserted, namely:—
“physical incapacity, unsoundness of mind, insolvency, conviction in a criminal case and engagement in any other paid employment,”.
7. In the said rules, in rule 13,—
(a) in sub-rule (1), for the words “The Ombudsman shall receive and consider complaints or disputes relating to”, the words “The Ombudsman shall receive and consider complaints relating to deficiency in insurance services provided by an insurer, including” shall be substituted;
(b) in sub-rule (1), for clause (i), the following clause shall be substituted, namely:—
“(i) any other matter arising from violation of the provisions of the Insurance Act, 1938, or of any rule or regulations made thereunder, or of the Insurance Regulatory and Development Authority of India (Protection of Policyholders‘ Interests) Regulations, 2017 or any other regulation made by IRDAI, or of any circular, guideline or instruction issued by IRDAI, or of the terms and conditions of the policy contract, in so far as such matter relates to issues mentioned in clauses (a) to (h).”.
8. In the said rules, in rule 14,—
(a) in sub-rule (3), in clause (a), after the word “written”, the words “or electronic” shall be inserted;
(b) after sub-rule (5), the following sub-rule shall be inserted, namely:—
“(6) The Council for Insurance Ombudsmen shall develop a complaints management system.”.
9. In the said rules, in rule 15, after sub-rule (4), the following sub-rule shall be inserted, namely:—
“(5) The Ombudsman may, on his own or on the request of the complainant, hear a matter through video conference if he is satisfied that circumstances so require, after notifying the complainant and the insurer concerned, subject to guidelines issued by the Council for Insurance Ombudsmen in this regard and published on its website.”.
10. In the said rules, in rule 17, in sub-rule (6), after the words “the Ombudsman”, the words “and upload the details in the complaints management system” shall be inserted.
[F. No. 14019/02/2019-Ins.II]
SAURABH MISHRA, Jt. Secy.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 27th April, 2017, vide notification number G.S.R. 413 (E), dated the 25th April, 2017 and were subsequently amended by notification number G.S.R. 785(E), dated the 17th August, 2018.
