Ombudsman Scheme Under Insurance Industry

OMBUDSMAN: An Ombudsman is an officer, appointed by the Government, who investigate complaints, lodged by citizen against Government, Universities, Colleges, Municipalities, Companies, Financial Institutions etc., and attempt to resolve the complaint with mediation or marking recommendations.

'Ombudsman' is taken from a Swedish word it means 'Legal Representative', appointed to investigate the cases lodged before it by common citizen, who is aggrieved by any act of Government or non-Government Organizations.

An Ombudsman is an important Government Authority under Insurance Industry. It is a fast and most effective grievance solving authority. In other sectors also Government has introduced Ombudsman Scheme.

The Central Government framed rules known as Redressal of Public Grievances Rules, 1998 in exercise of the powers vested in it under Section 114(1) of the Insurance Act, 1938.

The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November 1998 with the purpose of quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances. This institution is of great importance and relevance for the protection of interests of policy holders and also in building their confidence in the system. The institution has helped to generate and sustain the faith and confidence amongst the consumers and insurers.

APPOINTMENT OF INSURANCE OMBUDSMAN

The governing body of insurance council issues orders of appointment of the insurance Ombudsman on the recommendations of the committee comprising of Chairman, IRDA, Chairman, LIC, Chairman, GIC and a representative of the Central Government. Insurance council comprises of members of the Life Insurance council and general insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of insurance council consists of representatives of insurance companies.

ELIGIBILITY

Ombudsman are drawn from Insurance Industry, Civil Services and Judicial Services.

TERMS OF OFFICE

An insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of sixty five years, whichever is earlier. Re-appointment is not permitted.

TERRITORIAL JURISDICTION OF OMBUDSMAN

The governing body has appointed twelve Ombudsman across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. The offices of the twelve insurance Ombudsman's are located at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9) Ahmedabad, (10) Lucknow, (11) Mumbai, (12) Hyderabad. The areas of jurisdiction of each Ombudsman has been mentioned in the list of Ombudsman.

THE OMBUDSMAN MAY RECEIVE AND CONSIDER COMPLAINTS OF INDIVIDUALS RELATING TO

• Any partial or total repudiation of claim by an insurer;
• Any dispute in regard to premium paid or payable in terms of the insurance policy;
• Any dispute in regard to the legal construction of the policies in so far as such
• Dispute relate to the claims;
• Delay in settlement of claims;
• Non-issue of insurance document to the customer after receipt of premium;
• The ombudsman shall act as counsellor and mediator in matters which are within his terms of reference and, if requested to do so in writing by mutual agreement by the insured person and insurance company;
• The ombudsman's decision whether the complaint is fit and proper for being considered by it or not shall be final.

WHEN A COMPLAINT TO BE MADE TO THE OMBUDSMAN

• If the insurer has rejected a written representation of the complainant; or
• The complainant has not received any reply within one month after the insurer receive his representation;
• The complainant is not satisfied with the reply given to him by the insurer;
• The complaint is made not later than one year after the insurer had rejected the representation or sent his final reply on representation of the complainant and
• The complain is not on the same subject matter, for which any proceedings ' before any court or Consumer Court or Arbitrator' is pending or were so earlier.

RECOMMENDATIONS BY OMBUDSMAN

• When a complaint is settled through mediation of the Ombudsman , he makes a ' recommendation' which he considers fair in the circumstances of the case.
• Copies of the 'recommendation' shall be sent to the complainant and the insurance company.
• Such 'recommendation' shall be made not later than one month from the date of the receipt of the complaint.
• If a complainant accepts the recommendations of the Ombudsman , he will communicate his acceptance within 15 days of receipt of the recommendation.
• Acceptance letter to the Ombudsman should clearly state the settlement reached is acceptable to him in totality in full and final settlement of him claim.
• Thereafter , the Ombudsman will send a copy of the recommendation along with complainant's acceptance letter to the insurance company.
• The insurer shall comply with the terms and conditions of the recommendation immediately but not later than 15 days of the receipt of such recommendation.
• Finally, the insurer shall inform the Ombudsman about its compliance.

AWARDS; WHERE COMPLAINT IS NOT SETTLED THROUGH MEDIATION OF THE OMBUDSMAN

• He shall pass Award which he consider fair in the facts of the case and award shall be in writing.
• It shall state the amount awarded to the complainant.
• Ombudsman shall not award any compensation in excess of the loss suffered by the complainant or 30 Lakhs whichever is less.
• Award shall be passed within a period of three months from the date of receipt of complaint by the Ombudsman Office.
• Copies of Award shall be sent to the insurer and the complainant.
• Complainant shall furnish to the insurer within one month , a letter of acceptance that Award is in full and final settlement of his claim.
• The insurer shall comply with the award within a period of 15 days from the date of receipt of acceptance letter from the complainant and intimate the compliance to the Ombudsman Office.

CONSEQUENCES OF NON-ACCEPTANCE OF AWARD;

• If complainant does not intimate his acceptance of award to the insurer within a period of one month from the date of intimation of award, then the insurer is not liable to honor the award;
• If Ombudsman deems fit , he may award an Ex-Gratia payment.

THE DECISION OF OMBUDSMAN IS BINDING ON THE INSURERS, BUT THE CONSUMER IF HE FEELS AGGRIEVED BY THE DECISION CAN APPROACH THE CIVIL COURT FOR RELIEF.

DISCLAIMER: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Some judgements of counts have been taken as it is available. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assumes no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws and take appropriate advice of consultants. The user of the information agrees that the information is not professional advice and is subject to change without notice. Author assume no responsibility for the consequences of the use of such information.