Insurance Policyholder’s Grievance Redressal System
Insurance policyholder’s grievance redressal system is in complete mess with 16 out of 17 insurance ombudsman centres in the country currently vacant. Insurance ombudsman is missing in offices across India for one to three years. How many complaints have stacked up across India? New year 2018 will have number of complaints outstanding increasing as posts of Insurance Ombudsman continue to remain vacant. So, it is not surprising that number of cases get delayed at Ombudsman level even as number of complaints keeps increasing. Are consumer issues not much of a priority to the insurance regulator?
In September 2017, Moneylife had written about Mumbai ombudsman office not having full time ombudsman for the past 18 months. Insurance Ombudsman from Pune had been given additional charge of Mumbai office to help solve the complaints. Is it justified considering the volume of complaints handled by Mumbai and Pune offices? Even worse, the Pune ombudsman has retired and hence there is no respite for policyholder complaints from Maharashtra and Goa. Mumbai region, which has three to four times of the average insurance complaints handled in an Ombudsman office, has been impacted by lack of Ombudsman services. The grievance redressal machinery has been disrupted and aggrieved parties may have been considerably inconvenienced. Metros like Mumbai and Delhi get high volume of insurance complaints.
Surprisingly, even Delhi has no ombudsman. How can Insurance Regulatory and Development Authority of India (IRDAI) have no Insurance Ombudsman in service for 16 out of 17 insurance ombudsman centres in the country? Currently, only Noida has an Ombudsman, who is given additional charge of Chandigarh. But, he is set to retire in January 2018. Will IRDAI create a record next month of having no ombudsman present in India? All the ombudsman offices will be without a head and hence no hearing of cases? It will be a dubious record for IRDAI Chairman who is set to retire early 2018.
It is not the first time insurance Ombudsman offices are without its head. Around five years ago, there was no Ombudsman in Ahmedabad for almost a year. Again, there is no Ombudsman in Ahmedabad for over three years. Having an Ombudsman in Ahmedabad office seems to be an exception rather than a norm.
Insurance grievances are on the rise. Both life and non-life have almost equal share of complaints. The main difference between them is that life insurance complaints include mis-selling by intermediary, while non-life insurance has grievances against third party administrator (TPA) or surveyor. Wrongful denial or partial settlement of claims is a major grouse of policyholders. The other reasons for complaint are, dispute in regard to premium paid or payable in terms of the policy, dispute on the legal construction of the policies in so far as such disputes relate to claims, delay in settlement of claims and non-issue of any insurance document to customers after receipt of premium.
The Ombudsman office helps in settling matters when there were inordinate delays in courts, including consumer courts. The Ombudsman is an independent office that provides speedy and cost-effective resolution of customers’ grievances if the insurance grievance cell of companies has not been able to provide satisfactory response to complaints. The waiting period for a policyholder after filing the complaint with the Ombudsman is three to six months when the Ombudsman is operating. Any disruption due to non-availability or part-time Ombudsman working, a long backlog of cases gets built up. Obviously, when consumers file a complaint, they are not given a timeframe in which they can hope to get a hearing or redressal.
The institution of Insurance Ombudsman had been useful in providing remedies to aggrieved insurance policy holders. There are 17 insurance Ombudsman offices across the country. For more details on the Insurance Ombudsman please visit http://www.gbic.co.in/ombudsman.html
Banking Ombudsman Scheme would now include deficiencies arising out of sale of insurance, mutual fund or other third party investment products by banks as well as complaints regarding mobile banking and electronic banking service in the country.
In a recent notification, Reserve Bank of India (RBI) says, “The pecuniary jurisdiction of the Banking Ombudsman to pass an Award has been increased to Rs20 lakh from existing Rs10 lakh. Compensation not exceeding rupees hundred thousand can also be awarded by the Banking Ombudsman to the complainant for loss of time, expenses incurred as also, harassment and mental anguish suffered by the complainant.”
This article was published in moneylife previously