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It is common knowledge that the Insurance Companies repudiate insurance claims (life insurance, Health Insurance or general insurance) on technical grounds or grant inadequate claims. The suffering policyholders have to move to Courts or Consumer Forums for due Redressal but this process is time, energy taking and frustrates the very purpose of taking insurance policies. The delay & the legal expenses involved is a big dissuading factor.

The government with a view to mitigate the difficulties of the insured came out with a shortcut for speedier disposal/sanction of insurance claims with the appointment of

Insurance Ombudsman. The Office of Insurance Ombudsman is an alternate Grievance Redressal platform which has been setup with an aim to resolve grievances of aggrieved policyholders of all types of insurance, group insurance policies & general insurance policies against Insurance Companies and their agents and intermediaries in a cost-effective and impartial manner. It has been designed as an out of the courts settlement system in a cost-effective, efficient and impartial way. At present, there are 17 Ombudsman Centres in our country situated in Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mumbai, Noida, Pune and Patna.

The Insurance Ombudsmen are empowered to receive and consider complaints alleging deficiency in performance required of an insurer on any of the following grounds:

√ Delay in settlement of claims.

√ Any partial or total repudiation of claims by the life insurer, general insurer or health insurer.

√ Disputes over premium paid or payable in terms of insurance policy.

√ Misrepresentation of policy terms and conditions in the policy document or policy contract.

√ Legal construction of insurance policies in so far as the dispute relates to claim.

√ Policy servicing related grievances against insurers and their agents and intermediaries.

√ 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.

√ Non-issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance.

√ Non-observance of or non-adherence to the provisions of any regulations made by the IRDAI for protection of policyholders’ interests

The complaint has to be made 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 if the insurance company has not resolved the claim to the satisfaction of the insured or not responded to it at all for 30 days. However, their is a monetary ceiling of the value of the claim including expenses. The jurisdiction of the insurance Ombudsman is Rs 30 lakhs.

The Ombudsman acts as s mediator and after appraisal of the facts & relevant documents of the case arrives at conclusion and makes a recommendation based on the facts of the dispute. If the complainant accepts the settlement arrived, the Ombudsman informs the company to comply with the terms within 15 days. However, if the settlement by of recommendation is not acceptable the Ombudsman makes an award within 3 months of receiving all the requirements from the complainant and the said award is binding on the insurance company and the insurance company has to comply with the award within 30 days of the receipt of award and also intimate the compliance of the same to the Ombudsman.

Are Insurance Ombudsman effective & just alternate Grievance Redressal platform 

However, if the complainant is not satisfied with the award, the complainant can take recourse to approaching a consumer court or regular courts. But the Insurance Company cannot challenge the award of the Insurance Ombudsman. The Courts have univocally held that an award passed by an insurance ombudsman cannot be construed to violate any right of the insurance company. Therefore, the insurance company cannot approach a writ court as a party aggrieved by the award of the insurance ombudsman.

It would be trite to the case of Calcutta High Court in Life Insurance Corporation Of India & ors. vs The Insurance Ombudsman & Ors Writ Petition no. 2299 (W) of 2016 decided on 15 September, 2017 wherein the Court held thus:

“The petitioners claim to be aggrieved by such award passed by the Insurance Ombudsman. The respondents contend that, in order to approach a writ court, an insurance company has to have a cause of action. A cause of action will arise if any right of the insurance company stands violated. An award passed by an insurance ombudsman cannot be construed to violate any right of the insurance company. Therefore, it cannot approach a writ court as a party aggrieved by the award of the insurance ombudsman.”

Statistics reveal that the Insurance Ombudsman dispose of a majority of cases filed before them but most of these cases are decided in favour of the Insurance Companies.

The reality is that Ombudsman are selected from amongst persons having experience of the insurance industry, civil service, administrative service or judicial service. Thus their approach is administrative and not judicial. The Government ought to appoint retired District Judges or retired High Court Judges as Insurance Ombudsman so that they may judge the complaints strictly in accordance with law.

Most of the insured do not have knowledge of the office of Insurance Ombudsman. It is imperative on the government to spread awareness in this regard so that more matters are settled using the good offices of the Insurance Ombudsman.

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  1. Kishan Chand Jain says:

    Informative right up. Needs to be read by all. The insurance sector is spreading its wings. The grievance redressal mechanism therefore should be made stronger and effective.

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April 2024