Chapter 2

INSURANCE OMBUDSMAN

INSURANCE OMBUDSMAN

The institution of insurance ombudsman was created by Government of India through a notification. The purpose of constitution of ombudsman is quick disposal of grievances of the insured customers and to mitigate their problems involved in redressed of grievances. This institution is mainly meant to protect the interest of policy holders and also build their confidence in the system. It has helped to generate and to sustain 1aith and confidence amongst the consumers and insurers.

The Ombudsmen are appointed in accordance with the Redressed of Public Grievances Rules, 1998, to resolve all complaints relating to settlement of claims on the part of insurance companies in a cost-effective, efficient and effective manner. Any person who has a grievance against an insurer may make a complaint to an Ombudsman within his jurisdiction, in the manner specified. However, prior to making a complaint, such person should have made a representation to the insurer and either the insurer has rejected the complaint or has not replied to it. Further, the complaint should be made not later than a year from the date of rejection of the complaint by the insurer and should not be any other proceedings pending in any other court,

Consumer Forum or arbitrator pending on the same subject matter The Ombudsmen are also empowered to receive and consider any partial or total repudiation of claims by an insurer, any dispute in regard to the premium paid in terms of the policy, any dispute on the legal construction of the policies in as much such a dispute relates to claims, delay in settlement of claims and the non-issue of any insurance  document to customers after receipt of premium.

The Ombudsmen act as a counsellor and mediator and make recommendations to both par ties in the event that the complaint is settled by agreement between both the parties. However, if the complaint is not settled by agreement, the Ombudsman may pass an award of compensation within three months of the complaint, which shall not be in excess of which is necessary to cover the loss suffered by the complainant as a direct consequence of the insured peril, or for an amount not exceeding rupees two million (including ex gratia and other expenses), whichever is lower. Ombudsman within his jurisdiction, in the manner specified However, prior to making a complaint, such person should have made a representation to the insurer and either the insurer has rejected the complaint or has not replied to it. rather, the complaint should be made not later than a year from the date of rejection of the complaint by the insured and should not be any other proceedings pending in any other court, Consumer Forum or arbitrator pending on the $name subject matter. The Ombudsmen are also empowered to receive and consider any partial or total repudiation of claims see an insurer, any dispute in regard to the premium paid in terms of the policy, any dispute on the legal construction of the policies in as much such a dispute relates to claims, delay in settlement of claims and the non-issue of any insurance document to Customers after receipt of premium.

The Ombudsmen act as a counsellor and mediator and make recommendations to both par ties in the event that the Complaint is settled lay agreement between both the parties, however, if the complaint is not settled by agreement, the Ombudsman may pass inward of compensation within three months of the complaint which shall not be in eyes of which is necessary to cover he loss suffered by the complainant as a direct consequence of the insured period, or for an amount not exceeding rupees two million including ex gratia and other expenses), whichever is lower.

Appointment of insurance ombudsman

The governing body of insurance council issues orders of appointment of the insurance ombudsman on the recommendations of the committee comprising of chairman IRDCA. Chairman LIC, Chairman GIC, and a represent ate of central government. An insurance ombudsman is appointed job a term of three years or till the incumbent attains the age of sixty five years whichever is earlier.

The governing body has appointed 12 ombudsmen across the country allotting them different geographical areas of jurisdiction. The offices of the insurance ombudsman are located at Bhopal, Bhubaneswar, Cochin, Guwahati, Chandigarh, New Delhi, Chennai, Kolkata, Ahmadabad, Luck now, Mumbai, and Hyderabad.

Removal from Office

  1.  An Ombudsman may be removed from service for gross misconduct committed by him during his team of office.
  2.  The Governing Body may appoint such person as it thinks fit to conduct enquiry in relation to misconduct of the Ombudsman.
  3.  All enquiries on misconduct will be sent to Insurance Regulatory Authority which may take a decision as to the proposed action to be taken against the Ombudsman.
  4.  On recommendations of the Insurance Regulatory

Authority if the Governing Body is of opinion that the Ombudsman is guilty of misconduct, it may terminate his services.

Powers 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:

  1. Any partial or total repudiation of claims by the insurance companies
  2. Dispute with regard to premium paid or payable in terms of the policy
  3. Dispute on the legal construction of the policy wordings in case such a dispute relates to his/her claims
  4. Undue delay in settlement of insurance claims and
  5. Non-issuance of any insurance document to customer’s alert receipt of premium.
  6. Disputes arising on account of Claims Reimbursement, for e.g. excessive deductions that are made

However, an Ombudsman’s powers are restricted too 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 melt and validity of an individual claim on case-to-case basis. 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:

  1. The complainant or aggrieved should have made a representation to the insurer named in the complaint.
  2. 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
  3. The complaint is not made later than one year after the insurer had replied in response to his/her queries.
  4. An aggrieved policyholder should not have approached any court, consumer forum or arbitrator before pertaining to the same case.

When a complaint is settled through the mediation of the Ombudsman, he/she shall make the recommendations which he feels and thinks is far 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 couples 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. 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. In case, 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 redressed 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 redressed, 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.

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