Insurance Ombudsman: An Overview

INSURANCE OMBUDSMAN

Insurance Ombudsman was created by Government of India by a notification dated 11th November, 1998. The purpose of this scheme was for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way. The objective is the quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressing of those grievances.
There are 17 Insurance Ombudsman in different locations and customers can approach the one having jurisdiction over the location of the insurance company office against which the complaint has to be registered.
The institution has great importance and relevance for the protection of interests of policyholders and also in building their confidence in the system. It has helped to generate and sustain the faith and confidence amongst the consumers and insurers, since the time it was established.

Appointment of Insurance Ombudsman
The Insurance Council being the governing body issues the appointment order of the Insurance Ombudsman. Such an appointment is based on the recommendations of the committee which is made up of the Chairman of IRDA, Chairman of LIC, Chairman of GIC and a representative of the Central Government.
As per Section 40 C of the Insurance Act, 1938, the Insurance council comprises of members of the Life Insurance Council and General Insurance Council. The governing body of Insurance Council consists of representatives of insurance companies.

Eligibility
Ombudsmen are picked from Insurance Industry, Civil Services and Judicial Services.

Terms of office
An Insurance Ombudsman is appointed for holding office for three years or till the incumbent attains the age of sixty-five years, whichever is earlier. Re-appointment is not permitted.

Territorial jurisdiction of Ombudsman
The office of the Ombudsman shall be located at such place as may be specified by the Insurance Council from time to time. In order to expedite disposal of complaints, the Ombudsman may hold sittings at various places within his area of his jurisdiction.
The offices of the twelve Insurance Ombudsmans, appointed by the governing body 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.

Office Management
The Ombudsman is provided a secretarial staff by the Insurance Council for assistance in discharging his functions and duties. The total expenses of the Ombudsman and his Staff are borne by the insurance companies who are members of the Insurance Council; the proportions are decided by the governing body.

Removal from office
An Ombudsman can 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. The Insurance Regulatory and Development Authority (IRDA) will receive all enquiries on misconduct. So the IRDA may take a decision as to the proposed action to be taken against the Ombudsman. The Governing Body may terminate the services of the Ombudsman, on recommendations of the IRDA, in case he is found guilty.

Power of Ombudsman
The functions of the Insurance Ombudsman can be broadly classified into two types: 1) conciliation, (2) Award making.
The Insurance Ombudsman has the power to receive and consider complaints from any person who has grievance against an insurer, in respect of personal lines of insurance.

The complaint may relate (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, or any grievance against which an insured may have against the insurer.
Ombudsman's powers are restricted to insurance contracts of value not exceeding Rs. 20 lakhs. The insurance companies are required to honour 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 lodging a complaint:

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 have not received any reply within a period of 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.

You can approach the Ombudsman with complaint if:
You have first approached your insurance company with the complaint and
· They have not resolved it
· Not resolved it to your satisfaction or
· Not responded to it at all for 30 days
· Your complaint pertains to any policy you have taken in your capacity as an individual and
· The value of the claim including expenses claimed is not above Rs 20 lakh

THE SETTLEMENT PROCESS

Recommendation:
The Ombudsman will arriver at a fair recommendation based on the facts of the dispute, after the process of mediation. Such a recommendation shall be 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.

If the recommendation of the Ombudsman is accepted as a full and final settlement, the Ombudsman will inform the insurance company, which will have to comply with the terms of settlement in 15 days after it is given.

Award:
If the recommendations of the ombudsman are not accepted, and a settlement by recommendation does not work, the Ombudsman will pass an award within 3 months of receiving the complaint and which will be a speaking award with the detailed reasoning.

Such an award of the ombudsman is binding on the insurance company but not binding on the policyholder. The Ombudsman can also award an ex-gratia payment

If the policy holder is not satisfied with the award of the Ombudsman he can approach other venues like Consumer Forums and Courts of law for redressing 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 the office falls for the purpose of redressing of grievances if any, which may arise subsequently.

Once the Award is passed
· It has to be accepted in writing and the insurance company has to be informed of it within 30 days and
· The Insurance Company has to comply with the award in 15 days subsequent to that.

Insurance Ombudsman’s offices have been established in 17 cities all over India, each with its own jurisdiction. The complainant has to approach the Ombudsman under whose jurisdiction the insurance company office against whom the complaint is to be filed is there.

Conclusion

Thus it can be concluded that a steady increase in number of complaints received by various Ombudsman shows that the policyholders are reposing their confidence in the institution of Insurance Ombudsman.