BUILDING A ROBUST AND RESILIENT INSURANCE OMBUDSMAN SYSTEM

The concept of Ombudsman began in Sweden where an independent executive was appointed by the government to look into the disputed matters of the citizens. Generally ombudsman is a person appointed by the organization to resolve disputes between someone outside the organization and the organization. The Insurance Ombudsman scheme was created by Government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way. There are 17 Insurance Ombudsman in different locations and a policyholder can approach the one having jurisdiction over the location of the insurance company office. The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances. This institution is of great importance and relevance for the protection of interests of policy holders and also in building their confidence in the system. The institution has helped to generate and sustain the faith and confidence amongst the consumers and insurers. Any person including a sole proprietor, micro entrepreneur, members covered in a group insurance policy who has a grievance against an insurer may by himself or through his legal heirs, nominee or assignee or employer as the case may be can approach an Insurance Ombudsman for Redressal of any grievance arising out of an insurance policy by making 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 ombudsman primarily comes into the picture for complaints that involve monetary compensation. The insurance ombudsman mechanism had been set up by the insurers themselves, as an alternative dispute redressal system. It is a quasi-judicial body, established to address the grievances of customers, without them having to involve themselves in lengthy court proceedings. The ombudsman deals with various types of complaints, but most are usually related to claim disputes. Insurance Ombudsman Rules, 2017 came into force from the date of their publication in the Official Gazette. The objects of these Rules is to resolve all complaints of all personal lines of insurance, group insurance policies, policies issued to sole proprietorship and micro enterprises on the part of insurance companies and their agents and intermediaries in a cost effective and impartial manner. An Ombudsman is appointed for a term of three years and shall be eligible for reappointment provided that no person can hold office as an Ombudsman after he has attained the age of seventy years. Typically, the ombudsman comes to a decision in one or two hearings, unlike court cases where several rounds of hearing may take place before a decision is awarded. While the award given by an ombudsman is binding on insurers, it is not binding on the policyholders. In Insurance industry like any other industry, there are customers and investors who are not satisfied with the policy or the companies offering the policies. The Insurance Ombudsman is a scheme of the government to address those complaints of the policyholders for effective and efficient settlement of the problems out of the courtroom and in an impartial manner. The Insurance Ombudsman can now award compensation up to Rs 30 lakh for any disputes related to claims/grievance in an insurance policy.   INSURANCE ON PERSONAL LINES: Insurance on personal lines means an insurance policy taken or given in an individual capacity, e.g. life insurance, personal accident insurance, mediclaim insurance, insurance of personal property of the individual such as motor vehicle, household articles, etc. An insurance ombudsman deals with the disputes related to claim settlement, mis-selling, premium payment, legal construction of policy wordings etc. Insurance ombudsman is responsible for protecting the interests and settling grievances of policy holders. The main objective behind appointing ombudsman is to settle the grievances and complaints of policy holders outside court system in a cost-effective, efficient and impartial manner. Policy holders can lodge their complaints online through www.igms.irda.gov.in. However, the aggrieved policy holders can’t approach the ombudsman directly. They have to first lodge their complaints with the insurers. If the insurance company doesn’t respond to a complaint within 30 days or if the policyholder is not satisfied with the response, policyholders can approach the insurance ombudsman.  The ombudsman accepts written complaints only. This institution is of great importance to the consumers as they are given a platform to express their issues with health Insurance companies and get the issues resolved. Since the institution of Ombudsman India is for protecting the policy holder’s interest, it puts consumer’s faith in the insurance companies and ensures that insurance companies are accountable in their transactions. The Ombudsman receives and considers complaints or disputes relating 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) . Once a complaint is filed with the ombudsman, the body arrives at a recommendation based on the facts of the dispute. If the complainant (the policyholder) accepts the award, it is considered a full and final settlement. Upon acceptance by the policyholder, the ombudsman informs the insurance company, which has to comply with the terms within 15 days.   COMPLAINT PROCEDURE: 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 complaint should be in writing, duly signed by the complainant or through his legal heirs, nominee or assignee and should state clearly the name and address of the complainant, the name of the branch or office of the insurer against whom the complaint is made, the facts giving rise to the complaint, supported by documents, the nature and extent of the loss caused to the complainant and the relief sought from the Insurance Ombudsman. No complaint to the Insurance Ombudsman shall lie unless the complainant makes a written representation to the insurer named in the complaint and— (i) either the insurer had rejected the complaint; or (ii) the complainant had not received any reply within a period of one month after the insurer received his representation; or (iii) the complainant is not satisfied with the reply given to him by the insurer; (b) The complaint is made within one year— (i) after the order of the insurer rejecting the representation is received; or (ii) after receipt of decision of the insurer which is not to the satisfaction of the complainant; (iii) 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 Ombudsman is empowered to condone the delay in such cases as he may consider necessary, after calling for objections of the insurer against the proposed condonation and after recording reasons for condoning the delay. No complaint before the Insurance Ombudsman shall be maintainable on the same subject matter on which proceedings are pending before or disposed of by any court or consumer forum or arbitrator.   FINANCIAL JURISDICTION OF AN INSURANCE OMBUDSMAN: The Ombudsman has a secretarial staff provided to him by the insurance council to assist him in discharging his duties. The total expenses on Ombudsman and his staff are incurred by the insurance companies who are members of the insurance council in such proportion as may be decided by the governing body. Ombudsman can award any compensation up to the loss suffered by the complainant as a direct consequence of the cause of action; or award compensation not exceeding Rs Thirty lakhs (including relevant expenses, if any). The governing body of insurance council issues orders of appointment of the insurance Ombudsman on the recommendations of the committee comprising of Chairman, IRDA, Chairman, LIC, Chairman, GIC and a representative of the Central Government. Insurance council comprises of members of the Life Insurance council and general insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of insurance council consists of representatives of insurance companies. Ombudsmen are drawn from Insurance Industry, Civil Services and Judicial Services.  An insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of sixty five years, whichever is earlier. Re-appointment is not permitted. The governing body has appointed Seventeen Ombudsman across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. An Ombudsman may be removed from service for gross misconduct committed by him during his term of office. The governing body may appoint such person as it thinks fit to conduct enquiry in relation to misconduct of the Ombudsman. On recommendations of the IRDA, the Governing Body may terminate his services, in case he is found guilty.   AUTHORITY OF OMBUDSMAN: Insurance Ombudsman has two types of functions to perform (1) conciliation, (2) Award making. The insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any person who has any grievance against an insurer. The complaint may relate to any grievance against the insurer i.e. (a) any partial or total repudiation of claims by the insurance companies, (b) dispute with regard to premium paid or payable in terms of the policy, (c) dispute on the legal construction of the policy wordings in case such dispute relates to claims; (d) delay in settlement of claims and (e) non-issuance of any insurance document to customers after receipt of premium. Ombudsman’s powers are restricted to insurance contracts of value not exceeding Rs. 30 lakhs. The insurance companies are required to honour the awards passed by an Insurance Ombudsman within three months. Any complainant, whose complaint on the same subject matter is or was before a Court/Consumer Forum or an Arbitrator cannot approach an Insurance Ombudsman.  When a complaint is settled through the mediation of the Ombudsman, he makes the recommendations which he thinks fair in the circumstances of the case. Such a recommendation is made not later than one month and copies of the same sent to complainant and the insurance company concerned. If the complainant accepts recommendations, he will send a communication in writing within 15 days of the date of receipt accepting the settlement. The ombudsman has to pass an award within a period of three months from the receipt of the complaint. No complaint before the Insurance Ombudsman can be maintainable on the same subject matter on which proceedings are pending before or disposed of by any court or consumer forum or arbitrator. The complainant does not require a lawyer since formal court procedures are not involved. In case both parties agree for mediation, the Ombudsman gives his Recommendation within 1 month; otherwise, he passes an Award within 3 months from the date of receipt of all requirements from complainant. No fees / charges are required to be paid. If considered necessary, the Insurance Ombudsman conducts hearing of both the parties so as to provide them with reasonable opportunity of being heard before an award is passed. After the hearing the judgement is given then and there and the minutes prepared and both parties sign on the same. As per the guidelines, the Ombudsman is required to dispose the complaint within 3 months from receiving the complaint; however, it takes about 1-1.5 years to get an award. This is due to the overload of complaints. Nevertheless, this is a very effective and zero cost way to get your complaint settled. SETTLEMENT OF CASES: Steady increase in number of complaints received by various Ombudsman shows that the policy-holders are reposing their confidence in the institution of Insurance Ombudsman. During 2015-16, the Seventeen Ombudsmen centres spread across India have received a total of 26177 complaints. While 17257 complaints (66 per cent) pertained to life insurers, the remaining 8920 complaints (34 per cent) related to non-life insurers. This was in addition to 6782 complaints pending with various offices of Ombudsmen as at the end of March 2015. During 2015-16, Ombudsmen disposed of 30266 complaints. Out of these complaints, Ombudsmen declared 49.56 per cent of the complaints as non-acceptable/not-entertainable. Awards/recommendations were issued for 29.31 per cent of total complaints. Other than this, 9.54 per cent of the complaints were withdrawn/ settled, while nearly 11.59 per cent of the complaints were dismissed. 2693 complaints were pending as on 31^st March, 2016.   The Ombudsman may, if he deems fit, allow the complainant to adopt a procedure other than under sub-rule (1) or sub-rule (2) of rule 14 for making a complaint, after notifying the parties to the dispute. The Ombudsman have the power to ask the parties concerned for additional documents in support of their respective contentions and wherever considered necessary, collect factual information relating to the dispute available with the insurer and may make available such information to the parties concerned. He may obtain the opinion of professional experts, if the disposal of a case warrants it. The Ombudsman can dispose of a complaint after giving the parties to the dispute a reasonable opportunity of being heard. Where a complaint is settled through mediation, the Ombudsman can make a recommendation which it thinks fair in the circumstances of the case, within one month of the date of receipt of mutual written consent for such mediation and the copies of the recommendation shall be sent to the complainant and the insurer concerned. If the recommendation of the Ombudsman is acceptable to the complainant, he can send a communication in writing within fifteen days of receipt of the recommendation, stating clearly that he accepts the settlement as full and final. The Ombudsman shall send to the insurer, a copy of its recommendation, along with the acceptance letter received from the complainant and the insurer shall, thereupon, comply with the terms of the recommendation immediately but not later than fifteen days of the receipt of such recommendation, and inform the Ombudsman of its compliance. In case a complainant is not satisfied with the Award of an insurance Ombudsman he can exercise his right to take recourse to the normal process of law against the insurance company.   INSURERS CAN’T CHALLENGE THE AWARD: The most interesting part is that, the order of the Ombudsman is binding on the Insurance Company, they cannot challenge the same in the court and have to go by the order, whereas, if the policyholder is not satisfied with the award of the Ombudsman he can approach other venues like Consumer Forums and Courts of law for redressal of his grievances. As per the policy-holder’s protection regulations, every insurer shall inform the policy holder along with the policy document in respect of the insurance Ombudsman in whose jurisdiction his office falls for the purpose of grievances redressal arising if any subsequently. The Insurance Ombudsman institution was created by Government of India for individual policyholders for settlement of their complaints against Insurance Companies in a cost-effective, efficient and impartial manner. However, if the policyholder is not satisfied and does not accept the award, the ombudsman is bound to pass an order within 90 days of receiving the complaint. The complainant has to accept or reject the award within 30 days. If the complainant is not satisfied by the award, he can challenge it in court. The complainant can approach the consumer court after approaching the ombudsman, but cannot go back to the ombudsman after he has gone to the court.  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.   ISO 9001:2015 (QMS) CERTIFICATION: The Office of the Insurance Ombudsman, Delhi established under Redressal of Public Grievances, 1998, to deal with consumer complaints against the Insurance Companies operating in General Insurance business and Life Insurance business has been awarded ISO 9001:2015 certification by Standardisation, Testing and Quality Certification (STQC, established under Ministry of Electronics and Information Technology) for Quality Management Standard (QMS). Out of 17 offices of the Insurance Ombudsman across the country, the Delhi office of Insurance Ombudsman has got the distinction of First Office being certified as ISO 9001 : 2015 office. On 28.02.2017 a total of 27926 complaints were received out of which 24140 complaints were disposed off.  Certification is based on quality management principles including strong customer focus, motivation and continual improvement and review. With this standard certification, OIO, Delhi demonstrates its commitment to mediate for fair settlement of all complaints under its purview in efficient, impartial, consistent and transparent manner, as provided in the quality policy of the OIO, Delhi.  The ISO 9001:2015 certificates is the model for quality assurance and the fact that Delhi office has been certified in this early stage of new certification system, proves beyond any doubt that they focus on customer satisfaction, process approach, conforming to regulatory requirements and active involvements of all the stake holders. It has often been alleged that the ombudsman often is a representative of the service provider and sides with the provider. The banking ombudsman is appointed by the Reserve Bank of India and is usually a chief general manager or general manager of the RBI. The insurance ombudsman is named by the Governing Body of the Insurance Council (GBIC) which was set up to appoint and supervise the insurance ombudsman. The taxation ombudsman is appointed by the Centre on the recommendations of an expert committee. It is shocking to see that most service providers have very incompetent help desk, phone and email support. The complainant can hardly make any progress for an amicable resolution with them. This is where the ombudsman comes into the picture and can help out. Since they have enough powers vested in them to pass awards and verdicts, they are a huge relief as the consumer is given an opportunity to resolve the matter in a time and cost effective manner. If the complainant has to approach the courts, the going will be very tough on time and monetary fronts. Insurance Ombudsman is a government initiative which doesn’t charge any money from the policyholders. Insurance products are beneficial but there are many legalities and terms and conditions which are attached to it. Hardly, any policyholder reads the full document and the terms and condition before investing nor any insurance agents will tell the facts of the insurance policy in detail. The issues arise from not having proper and adequate information about the policy. Insurance Ombudsman is very helpful and supportive for the policyholders and tries every bit to secure the investor’s money. The Ombudsman prepares an annual report detailing the activities undertaken during the previous financial year under their jurisdiction, statement of accounts and any other relevant information and submits to the Executive Council of Insurers with a copy to the IRDAI by the 30^th June every year. The Executive Council of Insurers on receipt of annual reports of all Insurance Ombudsman, furnish a report containing a general review of the activities of Insurance Ombudsman during the preceding financial year and such other information as it consider necessary, to the Central Government and to the IRDAI every year. An Advisory Committee consisting of eminent persons not exceeding five and including one Central Government nominee is constituted by the IRDAI to review the performance of the Insurance Ombudsman from time to time.