Insurance Ombudsman - Meaning, Role, and Complaint Process

They resolve these disputes through mediations or give out recommendations to settle the dispute. They are generally government appointed bodies. The Insurance Ombudsman scheme in India was established in November 1998 by the Government of India and serves as an alternative dispute resolution mechanism for individual policyholders. Let’s understand the depths of ombudsmen in India, their different types, what they do and how it benefits you.

What are the Types of Ombudsman in India?

While the role of ombudsman is to help citizens of India get their disputes resolved, there are many types of ombudsmen in India, each catering to a specific sector. Here are the different types of ombudsmen:

Key Functions of the Insurance Ombudsman

The Insurance ombudsman is elected by IRDAI (Insurance Regulatory and Development Authority of India). It takes complaints of the policyholders against health, term and general insurance companies. The Insurance ombudsman is handled by CIO (Council of Insurance Ombudsman). Here are the key functions of the insurance ombudsman:

1. Resolving Policyholder Complaints

Any grievances of the policyholder regarding claim settlements, policy servicing, premium disputes, and misrepresentation of policy terms is resolved by the ombudsman.

2. Offering Free, Fair, and Quick Redressal

Justice should be free of cost. The insurance ombudsman does not charge anything for its services. Also, the CIO tries to resolve the dispute within 90 days of the complaint.

3. Acting as a Mediator

The Ombudsman resolves disputes through mediation, giving a fair resolution to both the insurer and the policyholder.

4. Identifying Systemic Issues

They do not just settle cases as per individual complaints; they also keep an eye on recurring issues, and update the terms of insurance policies to reduce such disputes.

What are the Types of Complaints Handled by the Insurance Ombudsman?

There are different types of complaints from the policyholder that needs resolution by the insurance ombudsman that include:

• Delay in Claim Settlement

Any delays in getting the claims settled beyond the given time, creates a dispute for the policyholder, and they can file a complaint about it at the Insurance Ombudsman.

• Partial or Total Claim Rejection

If the policyholder feels he has been wrongfully denied the claim, or given only a partial amount as settlement instead of the entire amount, they can complain about it to the Insurance Ombudsman.

• Disputes About Policy Terms or Conditions

If a policy term is misinterpreted or falsely used against the policyholder, they can again file a complaint against it.

• Issues with Premium Payments or Policy Servicing

Any issues regarding calculating insurance premiums, or deficiency in policy servicing is resolved by the Insurance Ombudsman.

• Violation of IRDAI Rules by the Insurer

If the insurer violates any rules set by IRDAI, they can be held responsible and liable to the policyholder as per the violation.

Ombudsman Eligibility - Who Can Approach the Insurance Ombudsman?

Although Insurance Ombudsman services are free of cost and available throughout the country, there are some eligibility criteria for who can approach them:

• Policyholders and Nominees

Only those individuals who hold an insurance policy or are a nominee are eligible to file a complaint at the ombudsman against the insurer.

• Coverage of Insurance Types

An Insurance Ombudsman covers health insurance, term/life insurance and general insurance types.

• Limit of Complaint Amount

The claim amount is capped at ₹50,00,000.

• Prior Approach to Insurer

Before approaching the Ombudsman, the policyholder must approach the insurer about the issue, and if the insurer’s solution is dissatisfactory or not sufficient, then and only then the policyholder can approach the Ombudsman.

Process to File a Complaint with Insurance Ombudsman

Here is the complete process to file a complaint with Insurance Ombudsman:

1. Initial Complaint to Insurer

Approach your insurance company with the grievance and await a response for up to 30 days.

2. Filing with Ombudsman

If unsatisfied, file a written complaint with the Ombudsman in your jurisdiction.

3. Submission Methods

Complaints can be submitted via post, email, or online through the official portal of CIO.

4. Required Forms

Complete the necessary complaint forms, ensuring all relevant details and supporting documents are included.

Documents Required to File a Complaint Insurance Ombudsman

Complete the process by submitting these documents:

• Copy of the complaint letter to the insurance company and their response, if any.
• Policy document and premium receipts.
• Claim form and correspondence related to the claim.
• Any other relevant documents supporting the complaint.

Time Taken for Resolution of a Complaint Insurance Ombudsman

The Insurance Ombudsman tries to resolve the dispute within 3 months of the complaint. This happens when the recommendation by the ombudsman does not resolve the complaint, after which the ombudsman takes 3 months to determine the exact resolution called “Award” which has to be followed by the insurer. Here are the factors that influence the time taken for resolution of a complaint:

• Completeness and accuracy of submitted documents.
• Complexity of the case.
• Timely cooperation from both the complainant and the insurer.

What are the Powers, Limitations & Drawbacks of Insurance Ombudsman?

While the Insurance Ombudsman plays a vital role in dispute resolution, it operates within certain parameters.

Powers

• Authority to mediate and recommend settlements between policyholders and insurers.
• Ability to pass awards that are binding on insurance companies.

Limitations

• Cannot entertain complaints involving claims exceeding ₹50 lakh
• Does not handle complaints already pending before courts or consumer forums.

Drawbacks

• Limited enforcement power if the insurer fails to comply with the award.
• The Ombudsman's decision is binding only on the insurer, not on the complainant, who may still seek legal recourse.

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Benefits of Approaching Insurance Ombudsman

Here are the key benefits of approaching Insurance Ombudsman with your grievances:

• Cost-Effective: No fees are charged for filing a complaint.

• Time-Saving: Resolutions are typically provided within three months.

• Simplified Process: The procedure is straightforward and does not require legal representation.

• Impartiality: The Ombudsman operates independently, ensuring fair consideration of complaints

List of Insurance Ombudsman Offices in India

There are 17 Insurance Ombudsman Offices spread across India.

Final Thoughts

The Insurance Ombudsman had received 52,575 complaints in the year 2023-2024, out of which 49,705 cases were resolved, giving them a 94.5% success rate. These ombudsmen are the link between the policyholder and the insurers, helping them resolve disputes without any unfair practices. They are an important entity that ensures insurers are kept in check.

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