Reference: IRDAI/CAD/CIR/MISC/105/5/2022
Dated: 26th May,2022
The Authority undertook comprehensive review of pending cases of all offices of the Insurance Ombudsman. As per the data obtained from Council for Insurance Ombudsmen, there are total of 711 Insurance Ombudsman awards that are pending for compliance, of which, 162 awards are pending for more than one year, which is rather unsatisfactory.
Insurers are therefore advised to adhere to the timelines of award settlement as per Rule 17(6) of the Insurance Ombudsman Rules, 2017. In case of an appeal against the award issued by the Insurance Ombudsman, the insurers are advised to inform the complainant as per Authority’s circular ref. IRDA/CAD/CIR/MISC/063/03/2016 dated 01-04-2016 and also inform the respective Insurance Ombudsman about the same.
Rules 17 of the Insurance Ombudsman Rules, 2017 deals with Award
(1) Where the complaint is not settled by way of mediation under rule 16, the Ombudsman shall pass an award, based on the pleadings and evidence brought on record.
(2) The award shall be in writing and shall state the reasons upon which the award is based.
(3) Where the award is in favour of the complainant, it shall state the amount of compensation granted to the complainant after deducting the amount already paid, if any, from the award :
Provided that the Ombudsman shall, -
- not award any compensation in excess of the loss suffered by the complainant as a direct consequence of the cause of action; or
- not award compensation exceeding rupees thirty lakhs (including relevant expenses, if any).
(4) The Ombudsman shall finalise its findings and pass an award within a period of three months of the receipt of all requirements from the complainant.
(5) A copy of the award shall be sent to the complainant and the insurer named in the complaint.
(6) The insurer shall comply with the award within thirty days of the receipt of the award and intimate compliance of the same to the Ombudsman.
(7) The complainant shall be entitled to such interest at a rate per annum as specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999, from the date the claim ought to have been settled under the regulations, till the date of payment of the amount awarded by the Ombudsman.
(8) The award of the Insurance Ombudsman shall be binding on the insurers.
Insurer's attention is drawn to Authority’s Circular ref. IRDA/CAD/CIR/MISC/038/03/2019 dated 05-03-2019 on the above subject matter wherein the insurers were cautioned that non-compliance of awards passed by Insurance Ombudsman within the prescribed timelines would be viewed very seriously.
Circular ref. IRDA/CAD/CIR/MISC/038/03/2019 dated 05-03-2019
Attention is drawn to Authority’s Circular No. IRDAI/CAD/CIR/MISC/063/03/2016 dated 01-04-2016 vide which all Insurers were directed to submit data pertaining to compliance of awards passed against them by Insurance Ombudsman.
Upon perusal of the data received from all Insurers for the period April, 2018 to December, 2018, the following observations are made:
a) While Insurance Ombudsman Rules, 2017 mandate Insurers to comply with the awards passed by Insurance Ombudsman within a period of 30 days of receipt of award, many Insurers are neither complying with the awards nor filing appeals within 60 days of receipt of awards in accordance with provisions of circular referred above.
b) While submitting the statement, reasons for pendency for each award have to be mentioned separately. However, many Insurers are not mentioning the same.
c) Few Insurers are not even submitting statements prescribed under above mentioned circular to designated person.
Upon calling for reasons for non-compliance from the Insurers, few Insurers are submitting that they have complied with the award post timelines stipulated under the above mentioned rules. Non-compliance of these awards within the timelines prescribed would severely undermine the grievance redressal framework laid down and cause undue hardships to the policyholder.
In view of the above, all Insurers are hereby cautioned that non submission of statements prescribed under above mentioned circular and non-compliance of awards by Insurers within the timelines prescribed under Insurance Ombudsman rules, 2017 will be viewed very seriously.
IMPACT
It is mandatory to comply with award passed by Ombudsman according to the provisions of the Insurance Ombudsman Rules,2017. The award should be complied within a period of 30 days from the date of receipt of copy of award. An insurer is required to intimate the compliance of award to the Ombudsman within 30 days. In case insurer not satisfied with the award then he can file an appeal within a period of 60 days from the date of receipt of award. Non-compliance may lead to cancellation of registration of insurer and heavy penalty will be levied.
DISCLAIMER: The article presented here is only for sharing information and knowledge with the readers. In case of necessity do consult with insurance advisors.
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