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Insurance Ombudsman

Ombudsman traces its history to Sweden way back in 19th century and it literally means an authority who is empowered to investigate individual complaints against public authorities, departments etc. Later it has been adopted in many countries including UK, Australia etc.

In India the idea of insurance ombudsman(IO) was first mooted in the year 1998. Central government by the powers conferred on it by sub section (1) section 114 of insurance act 1938, has set up an ombudsman specifically for Insurance sector. Main objective of insurance ombudsman is redressal and settlement of disputes arising between insured and insurer. Insurance ombudsman is a quasi-judicial body established for speedy settlement of disputes in fair, impartial and judicial manner.

The proceedings before insurance ombudsman are summary proceedings without involving any cost and they are speedy too. Thus, the main advantages of IO is its cost effectiveness and expeditious settlement of disputes.

Insurance ombudsman is open to all individuals where the claim amount is less than Rs.20 lakhs. Powers of insurance ombudsman include examining the complaints regarding:

• Partial or total repudiation of claims

• Delay in settlement of claims

• Legal construction of policy(policy wordings)

• Premium paid or payable

• Non-issue of insurance documents to customers after receipt of premium.

Therefore the insurance ombudsman cannot attend to all complaints. Following are the instances where the insurance ombudsman cannot entertain a complaint.

• Any complaint which falls outside the territorial limits of the ombudsman

• Any complaint where the claim amount is more than 20 lakhs.

• Any dispute/issue/complaint which is under trial in any other judicial or quasi judicial body.

• Where the complaint is not regarding personal lines of business.

• Where the complaint is filed by any artificial juristic person

• Any complaint which is lodged after one year from the date of issue of first reply by the insurer.

First step to seek redressal under IO scheme is that insured has to apply in writing to the IO under whose jurisdiction the insurer falls. Complaint can be filed either by the insured or his legal heirs and should clearly state the name and address of the insurer against whom the complaint is made, nature and circumstances giving rise to dispute, nature of loss sustained by the complainant and relief sought from IO. Further, complainant has to substantiate his claim with all the documentary evidences.

Initial role of the IO would be of a mediator to settle the grievance on a mutually agreeable basis. This mediation process would be for a maximum of 1 month. After hearing both the parties IO may pass an award, which if acceptable to the complainant, is sent to insurer for final execution. Insurer has to comply with the award within 15 days and same has to be informed to the IO.

If the grievance is not settled on a mutually agreeable basis, IO gives a speaking award within a period not exceeding three months. If the complainant is not satisfied with the award, he can appeal in any other forum or court, however such facility is not available to the insurer. To this extent IO is a one sided system.

Here it may be noted that award passed by the IO has to be complied with, by the insurer within the specified time i.e., 15 days. However, if the insurer opts for non-compliance of the award, there is nothing an IO can do. That is to say that it has no judicial powers for the execution of award given by it, like other judicial systems like consumer forums, civil courts etc.

Specific feature of the IO is that no advocates are allowed to represent insurer/ complainant to argue their respective cases. Further IO being a non-judicial authority, does not have the powers of summoning particular persons/witness and examining them on oath. Another specific feature of IO is that it can pass award for ex-gratia settlement of disputes, while such powers of exgratia settlement are not vested with other redressal mechanisms such as consumer courts etc.

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