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 the redressal of those grievances. This institution is of great importance and relevance for the protection of interests of policyholders 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.
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 of IRDA, Chairman of LIC, Chairman of GIC and a representative of the Central Government.
The insurance council comprises members of the Life Insurance Council and General insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of the insurance council consists of representatives of insurance companies.
Ombudsman is drawn from the Insurance Industry, Civil Services, and Judicial Services.
Terms of office
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 territorial jurisdiction of Ombudsman
The governing body has appointed twelve Ombudsmen 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 to expedite the disposal of complaints.
The offices of the twelve insurance Ombudsmen are located at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9) Ahmedabad, (10) Lucknow, (11) Mumbai, (12) Hyderabad. The areas of jurisdiction of each Ombudsman have been mentioned in the list of 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.
Removal from office
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 an inquiry about the misconduct of the Ombudsman.
All inquiries on misconduct will be sent to the Insurance Regulatory and Development Authority which may decide as to the proposed action to be taken against the Ombudsman. On recommendations of the IRDA, the Governing Body may terminate his services, in case he is found guilty.
Power 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 to 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 about the 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. 20 lakhs. The insurance companies are required to honor the awards passed by an Insurance Ombudsman within three months.
Manner of lodging complaint
The complaint by an aggrieved person has to be in writing and addressed to the insurance Ombudsman of the jurisdiction under which the office of the insurer falls. The complaint can also be lodged through the legal heirs of the insured. Before complaining:
i) The complainant should have made a representation to the insurer named in the complaint and the insurer either should have rejected the complaint or the complainant has not received any reply within one month after the concerned insurer has received his complaint or he is not satisfied with the reply of the insurer.
ii) The complaint is not made later than one year after the insurer had replied.
iii) The same complaint on the subject should not be pending with before any court, consumer forum or arbitrator
Recommendations of the Ombudsman
When a complaint is settled through the mediation of the Ombudsman, he shall make the recommendations which he thinks fair in the circumstances of the case. Such a recommendation shall be made not later than one month and copies of the same sent to the 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 shall pass an award within three months from the receipt of the complaint. The awards are binding upon the insurance companies.
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 policyholder’s protection regulations, every insurer shall inform the policyholder along with the policy document in respect of the Insurance Ombudsman in whose jurisdiction his office falls for grievances redressal arising if any subsequently.
A steady increase in the number of complaints received by various Ombudsmen shows that the policy-holders are reposing their confidence in the institution of Insurance Ombudsman.