INSURANCE OMBUDSMAN

[Mr. M. GOVINDARAJAN]

Ombudsman Rules

The Central Government, by virtue of powers conferred to it under section 24 of the Insurance Regulatory and Development Authority Act, 1999 (‘Authority’ for short), in supersession of ‘Redressal of Public Grievances Rules, 1998, made ‘The Insurance Ombudsman Rules, 2017’ (for short ‘Rules’). These Rules came into effect from 18.05.2021. 

Object of Rules

The object of the 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.

Applicability

These rules shall applicable to all insurers and their agents and intermediaries in respect of complaints of all personal lines of insurance, group insurance policies, policies issued to sole proprietorship and micro enterprises.

Council

The Rules provide for the establishment of a Council for Insurance Ombudsman.  The Council shall consist of nine members including Chairman.  The members shall be-

• 2 members from Life Insurers to be nominated by the Life Insurance Council;
• 2 members from General insurers, other than stand-alone health insurers, to be nominated by the General Insurance Council;
• 1 member from stand-alone health insurers to be nominated by the General Insurance Council;
• 1 representative of the Authority; and
• The Chairman of LIC or Chairman of GIPSA [General Insurers’ (Public Sector) Association of India], provided they are not acting as the Chairman of the Council of the Ombudsman.

The term of the Chairperson and other members is for 3 years.  A member of the Council for Insurance Ombudsmen shall not be eligible for re-nomination for a period of 3 years from the date he ceases to be a member. 

Functions of the Council

The following are the functions of the Council-

• to issue such guidelines, including, inter-alia, relating to the procedure for the day-to-day administration, secretariat staffing, secretariat administrative infrastructure, and such other related aspects of functioning of Insurance Ombudsman system. administration, secretariat staffing, secretariat administrative infrastructure, and such other related aspects of functioning of Insurance Ombudsman system;
• to direct an Ombudsman of such other territorial jurisdiction to hold additional charge of the Insurance Ombudsman where such vacancy may arise;
• to constitute such committees and as and when deemed necessary obtain the assistance of outside expertise for preparing the guidelines.

Appointment of Ombudsman

The Council of Ombudsman appoints the Ombudsman on the recommendations of the Selection Committee.  The qualifications prescribed for the appointment of Ombudsman are as below-

• age – not less than 55 years but not more than 65 years as on the last date specified for receipt of application;
• experience -  at least 25 years in the insurance industry and has held a post not less than one level below that of a director of a board. Has served for at least 25 years in the insurance industry and has held a post not less than one level below that of a director of a board; or
• a member of an all-India service or a civil service of the Union and has held a post of Joint Secretary or equivalent to the Government of India.

The selection committee shall, after giving an opportunity for interaction to all the candidates shortlisted by it, recommend to the Council for Insurance Ombudsmen a candidate for appointment against each vacancy in the office of Insurance Ombudsman, along with up to 2 additional candidates in order of preference as reserve candidates.

The Council for Insurance Ombudsmen shall, after considering the recommendations of the selection committee, appoint the recommended candidate as Insurance Ombudsman unless—

• the vigilance clearance has not been received; or
•  the Council for Insurance Ombudsmen is of the opinion that the nature of the inputs is such that it would not be in public interest that he be so appointed, and in such a case, the Council for Insurance Ombudsmen may consider a reserve candidate, in accordance with the order of preference, for appointment.

The Council for Insurance Ombudsmen, after considering of the suitability of the candidates, shall appoint a candidate as an Insurance Ombudsman.  An Insurance Ombudsman shall hold office for a term of 3 years or till he attains the age of 68  years, whichever is earlier, and shall not be eligible for reappointment.

Remuneration

The remuneration of the Ombudsman shall be Rs.2,25,000/- per month or such revised pay as determined by the Government plus pensionary benefits.

Territorial jurisdiction

The office of the Insurance Ombudsman shall be located at such places and shall have such territorial jurisdiction as may be specified by the Executive Council of Insurers from time to time.

Complaints

The Ombudsman shall receive and consider the complaints in relation to-

• delay in settlement of claims;
• any partial or full repudiation of claims;
• disputes over premium paid or payable in terms of a policy;
• misrepresentation of policy terms and conditions at any time in the policy document or contract;
• legal construction of policies in relation to the dispute in claim;
• issuing of a policy inconsistent with the proposal form submitted by the proposer;
• non issuance of insurance policy after receipt of premium of insurance;
• any other matter resulting in violation of the provisions of the Act, rules, relations, circulars, guidelines or instructions issued by the IRDAI from time to time or the terms and conditions of the policy contract.

The Central Government or IRDAI may refer any complaint or dispute in relation to insurance to the Insurance Ombudsman.  Such complaint shall be entertained by the Insurance Ombudsman.  The Insurance Ombudsman shall act as Counsellor and mediator relating to the dispute in relation to insurance. 

Procedure

Any person, aggrieved against an insurer, may file a complaint in writing duly signed by such person to the Insurance Ombudsman within one year.  The complaint may be filed by himself or through his legal heirs, nominee or assignee.  The complaint shall state the name and address of the complainant, the name of the office of the insurer, fact giving raise to the complaint supported by documents, the nature and extent of loss caused to the complainant and the relief sought.

The complaint shall be filed when-

• the insurer rejected the claim of the complainant;
• the complainant had not received any reply within a period of one month after the insurer received his claim;
• the complainant is not satisfied with the reply of the insurer.

The Ombudsman is having power to condone the delay in filing the complaint after recording the objections of the insurer.  The delay may be condoned by the Ombudsman by recording the reasons for the same.  The date of condonation of delay shall be deemed to be the date of filing of the complaint.

No complaint shall be entertained by the Ombudsman on the subject matter on which proceedings are pending before or disposed by any Court or consumer forum or arbitrator.

The Ombudsman is having power to call for the additional documents from the insurer or the complainant and collect information.  The Ombudsman may obtain the opinion of the professional experts.  The Ombudsman shall dispose the complaint after giving the parties to the dispute a reasonable opportunity of being hear. 

Recommendation

If the complaint is settled by mediation, the Ombudsman shall make a recommendation within one month from the date of receipt of mutual written consent from the parties to the dispute.  If the recommendation is accepted by the complainant, he shall a communication for the same within 15 days from the date of receipt of the recommendation.  Such acceptance shall be full and final.   The Ombudsman shall send a copy of the recommendation along with the acceptance of the complainant to the insurer.  The insurer shall comply with the terms of recommendation immediately but not later than 15 days of the receipt of such recommendation and inform the Ombudsman about the implementation of the recommendation.

Award

If the complaint is not settled by mediation, the Ombudsman shall pass an award based on the pleadings and evidence brought on record.  The award shall be in writing, duly signed by the Ombudsman, stating the reason for such award.  The award shall state the compensation granted by the Ombudsman to the complainant. The compensation shall not be in excess to that of the claim made by the complainant.  Such award shall be passed within 3 months on receipt of all requirements of the complaint.  The copy of the award shall be sent to the complainant and to the insurer.  The insurer shall comply with the award within 30 days from the date of receipt of the award.  The award shall be binding on the insurers.  The complainant shall be entitled interest at a rate per annum if there is a delay in settlement of award from the due date to the date of payment. 

Advisory Committee

IRDAI shall constituted one Advisory Committee consisting of not exceeding five members and one Central Government nominee to review the performance of the Insurance Ombudsman from time to time.  The IRDAI shall decide the time, venue and quorum of the meeting of the Advisory Committee.  The Committee shall submit its report to the IRDAI for review by the IRDAI and to take further action as deemed fit.