Ombudsman in Insurance

The Governing body of the Insurance Council is authorized by law to appoint Ombudsmen for the insurance industry. The function of the Ombudsman is to resolve complaints in respect of disputes between policyholders and insurers in cost effective, efficient and impartial manner.

The complaints to the Ombudsman may relate to -

• partial or total repudiation of claim
• any dispute regarding premium paid or payable in terms of the policy
• any dispute on the legal construction of the policy relating to claims
• delay in settlement of claims
• non-issue of any insurance document to customers after receipt of premium

The Ombudsman acts as a counsel and mediator in matters within its terms of reference. It is not a judicial authority. It has no right to summon witnesses. It has to make its decision on the basis of documents submitted to it. The complainant and the insurer are allowed to make personal submissions. But lawyers are not permitted to argue the case.

Complaints to the Ombudsman lie only when the insurer had rejected the complaint or no reply was received within one month of the complaint or he reply was not satisfactory. A complaint can be made within one year after the insurer had rejected the representation. The subject matter should not be already before any court or consumer forum or arbitration.

The Ombudsman is expected to make a recommendation within one month from the date of receipt of complaint. If the complainant accepts this recommendation, the insurer has to comply within 15 days and inform the Ombudsman accordingly. If the complainant does not accept the Ombudsman's recommendation, the Ombudsman shall pass an award in writing, stating the amount awarded which shall not be in excess of what is necessary to cover the loss suffered by the complainant or for an amount not exceeding Rs.20 lacs, whichever is lower. The award has to be passed within 3 months. The complainant has to intimate his acceptance of the award within one month by a letter of acceptance to the insurer and the insurer has to comply within 15 days and inform the Ombudsman. If the complainant does not intimate acceptance, the award can not be implemented.