Role of an Insurance Ombudsman

• Ombudsmen are arbitrators for insurance related disputes, to be resolved quickly and at a low cost.
• There are 12 offices of insurance ombudsmen’s across the country
• Any insurance related complaint can be filed
• Complaints upto Rs 20 lakhs for life or non life policies can be filed with the ombudsmen.

How to File a Complaint :

• File a written complaint with the insurer company
• Your complaint to the ombudsman must be filed within a year of rejection of a claim by the insurer
• The ombudsman intervenes only if you’ve not moved to the courts or approached a consumer forum
• You must file your complaint with the ombudsman who has jurisdiction over the region in which you have bought the policy.

CNBC India spoke to Shri G. Krishnamurthy, Ombudsman for Maharashtra and Goa Region on the role of insurance ombudsmen. Excerpts from the conversation.

Q : What is the function and power of the insurance ombudsmen today in India?

A : Insurance ombudsmen in India came into existence sometime in Nov 1998 while the banking ombudsmen had come somewhere in 1995. In Nov 1998 a notification was issued by the government for setting up ombudsmen’s offices in the country. So, according to that, the governing body of the insurance council viz the representatives of various insurance companies transacting life and non life insurance business in the country formed the insurance council. That insurance council was empowered to appoint the insurance ombudsmen in the country and the insurance council that time decided that 12 ombudsmen would be immediately appointed in the country thus today there are 12 ombudsmen functioning in the country.

These 12 ombudsmen are appointed on the recommendation of a selection committee which consists of the IRDA chairman, LIC chairman, GIC chairman and the secretary of the insurance department of the GOI. The notification provides for the powers of the ombudsmen, how he has to deal with the complaints, how he has to be an advisor, counselor, adjudicator, it prescribes everything. But there are certain restrictions as the ombudsmen cannot look into all sorts of complaints.

Q : In terms of functions and powers, what happens if I have a complaint / litigation, how does one approach the ombudsman?

A : The complainant or any person on his behalf can complain to the ombudsman giving a brief account of what exactly are his grievances but before looking at the complaint, the ombudsman has to see a few points like whether it is really a time barred complaint as the complaint has to be filed within a year of rejection of a claim by the insurer, another point to be kept in mind is that before coming to the ombudsman the complainant should have made a representation to the insurance company and received a reply which is not satisfactory or the representation has been rejected or there is no reply atleast for a month or so and again the most important thing is that he should not have gone to any other forum before coming to the ombudsman for eg a consumer forum etc.

The reason for ensuring that the complainant has not already gone to any other forum before coming to the ombudsman as an alternate avenue he has already been thought of by him so the ombudsman then has no powers to entertain him. As one complaint is already pending before the redressal forum on the same subject then the ombudsman has no powers.

Q : Suppose the complaint has already been rejected by a consumer forum then can the complainant approach the ombudsman?

A : Certainly not, as either it has already been rejected or it is pending, the ombudsmen cannot entertain the complaint.

Q : How many such cases do you actually get in a month with respect to the Maharashtra and Goa region that you take care of ?

A :  The Maharashtra and Goa offices were set up in sometime Nov 2000 when I was appointed as the full time ombudsman. Initially, the flow of complaints was very less, about 15 to 20 complaints per month but as time passed by and people became more aware of this, now we have about 45 to 50 complaints being registered every month.

Q :  What are the restrictions for the ombudsman?

A :  The restrictions are that they cannot complain against anything under the sun, they can complain only in respect of a few items which have been prescribed in the notification and that also mostly relates to claims.

Claims includes the delay in the time to settle the claim, supposing the company takes a very long time to settle the claims, they can come to ombudsmen with subject to, the above mentioned points where they should have made a representation, not have gone to consumer court, one year should not have elapsed, all these conditions are to be met with.

Then also against repudiation, whether it is a total repudiation, or a part settlement/ part repudiation. There is also a clause wherein they can come to an ombudsman on the legal construction of the policies in so far as they relate to claims. Also on non issue of documents after receipt of premium. Premium itself can be a subject matter of dispute – premiums paid or premiums payable.So there are five subjects on which they can complain to ombudsmen.

Q : Another role that the ombudsmen play is advisory? Would you advise an individual who approaches you with a problem on the procedure to follow from thereon?

A :  Certainly, we have received many calls from people and have advised them on the procedure to be followed and even after the complaint, the ombudsman immediately does not assume the role of an adjudicator or arbitrator. The basic role is an advisor or a counselor or a mediator.

So we hear both the sides and try to bring the parties together and there is an understanding and the company also sees the other side of the case and the complainant also is willing to accept the company’s offer and if they both agree, it is settled by means of a mediation.

Q : How binding is the judgement of the ombudsman on the companies?

A : The award, if I give is not binding on the party, he has to give acceptance on the implementation of the award. But the companies have an understanding that they will implement the award of the ombudsman and generally it is done as the entire set up has been made by all the companies jointly.

Q : If you have to advise an insurance policy holder or a potential investor, what would be the criteria that you would advise them to adopt when they are actually looking at an insurance policy?

A : First of all they must understand that this is not an informal arrangement. Insurance is a contract and it is a legal contract so they have to be careful about it as you enter into a contract or any other contract.

You have to be more careful as the contract of insurance is again based on the principle of utmost good faith. The insurance company does not know about the other party so the contract is concluded on the basis of what the other party says about himself so there shall be no non disclosure about any fact which is likely to affect the decision of the insurer. So that is a very important thing which the prospective/potential buyers of the insurance policies have to bear in mind and be careful about. And in case of any non disclosure the policy can be called in question and they have no remedy.