How to Resolve Insurance Disputes through Ombudsman?

Disgruntled customers can bring down institutions, brands and products. Organizations therefore take utmost care in laying out detailed guidelines for “grievance redressal”. Arbitrators or ombudsmen are appointed for looking into contentious issues which cannot be resolved at the lower level. They act as a referee and try to reconcile the misgivings which the customer may be facing.

For Insurance companies the role of the arbitrator is all the more important as the product is of intangible nature. The Insurance Ombudsman, as he is called, is vested with powers to handle disputes based on laid down rules and policies.

Insurance ombudsman:

Customers often face problems regarding their claims, premium payments and policy documents. In case of any grievance, they need to contact the concerned insurance office and lodge a complaint. If no response is received within 30 days, or if the response received is not to the satisfaction of the customer, then he or she may approach an insurance ombudsman.

What is the origin of the ombudsman?

On the 11th of November 1998, the Government of India, set up the post of ombudsman with the aim of fostering trust between the insured and the insurer. The role of facilitator for dispute resolution and protection of customer rights are performed by the ombudsman.

When does the complainant approach the ombudsman?

The customer or complainant has to perform the following steps before they can approach the ombudsman:

1. File complaint with the insurance company either through written communication, fax or email.
2. Complaint is filed but no response is received within 30 days
3. Complaint is filed but the response received is not satisfactory
4. Complaint has not already been filed with any other body like a consumer forum or court.

How to approach the ombudsman?

Once these conditions have been satisfied and the customer’s issue has still not been addressed up to his satisfaction, the customer can approach the ombudsman either through written application, fax or mail.

Across India, there are 12 ombudsman offices which are divided into different zones. It is however not necessary that one office is limited to a single state only. Complaint needs to be lodged with the ombudsman office under whose jurisdiction the insurance office falls.

What are the specific issues for which the customer can approach the ombudsman?

The issues which can be taken to the ombudsman for redressal are:

1. The policy document is not received by the customer even after successfully making the premium payment.
2. Claim lodged by the customer is rejected without valid reason by the insurance company
3. Non-payment of the claim amount after having accepted the claim.
4. Any disagreement arising regarding payment of premium amount as against payable amount
5. Issues relating to terms and conditions of the policy
6. Delay in claim processing

What are the extent of powers conferred on the ombudsman?

The ombudsman has the authority to settle disputes on insurance matters for all claims up to the amount of Rs. 20.00 lakhs. The verdict or decision of the ombudsman has to be conveyed to the customer within three months of having received the complaint.Insurance companies are bound to abide by his decisions.

Beyond ombudsman:

In case the customer does not agree with the decision of the ombudsman, he can approach the consumer forum or take legal recourse for settling his grievance.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in