IRDAI Asks Insurers To Settle Ombudsman Awards Pending For More than 30 Days

The Insurance Regulatory and Development Authority of India (IRDAI) has taken a comprehensive review of all pending cases with all offices of the insurance Ombudsman and advised insurers to ensure settlement of all insurance Ombudsman awards that are pending for more than 30 days.
 
According to a release by the IRDAI, there are a total of 711 insurance Ombudsman awards that are pending for compliance, of which, 162 awards are pending for more than one year. The insurance regulator has said that the delays look “unsatisfactory”, and therefore, all insurers must adhere to the timelines of award settlement in accordance with Rule 17(6) of the Insurance Ombudsman Rules, 2017.

The insurance regulator further said that in case of appeal against the award issued by the insurance Ombudsman, the insurers should inform the complainant as per IRDAI’s circular dated April 1, 2016 and inform the respective Insurance Ombudsman about the same. 

Apparently, the IRDAI had also issued a circular in March 2019 on the issue and cautioned insurers that non-compliance of awards passed by insurance Ombudsman within the prescribed timelines would be viewed very seriously.

What Is An Insurance Ombudsman?

The government had created the office of the insurance ombudsman to allow individual policyholders to have their complaints settled out of the courts in a cost-effective, efficient, and impartial way.

At present, there are a total of 17 insurance Ombudsman in different locations across the country. Any insurance policy holder who has a grievance against an insurer, can either himself or through his/her legal heirs, nominee or assignee, make a complaint in writing to the insurance ombudsman within whose territorial jurisdiction the branch or office of the insurer complained against, or the residential address or place of residence of the complainant is located.

One can approach the insurance ombudsman with a complaint if he or she: 
 
1] Has approached the insurance company with the complaint;
2] The insurance company has rejected it;
3] The insurance company has not resolved it according to the complainant’s satisfaction, or;
4] The insurance company has not responded to the complaint for 30 days.

The complaint must also pertain to any policy that one has taken in his/her capacity as an individual, and the value of the claim including expenses claimed is not above Rs 30 lakh.

One can complain to the insurance Ombudsman on a variety of matters, including non-issuance of insurance policy after receipt of premium, delay in settlement of claims, partial or total repudiation of claims by the life insurance company, general insurance company, or the health insurance company. 

These grievances could also relate to disputes with regard to issuance of the policy where it is not in conformity with the proposal form submitted at the time of buying the policy, or service related grievances against the insurance company, agents or intermediaries.

How Does The Ombudsman Act?

The insurance Ombudsman acts as a mediator and arrives at a fair recommendation based on the facts of the dispute.

Should the complainant accept it as a full and final settlement, the Ombudsman will inform the insurance company which has to then comply with the terms in 15 days.
 
Where a settlement by recommendation does not work, the Ombudsman passes an award within three months of receiving all the requirements from the complainant, and this is binding on the insurance company.

Once the award is passed, the insurance company has to comply with the award within 30 days of the receipt of the award and intimate the compliance of the same to the insurance Ombudsman.