One of the founding principles of insurance companies is to provide financial security to the insured individuals in the time of need. When someone purchases an insurance policy, they put their trust and faith in the company, believing that their claim will be honoured when the time comes. At the most fundamental and ethical levels, such confidence must be maintained.

However, it cannot be denied that insurance companies across the world function with the primary aim of generating profit, and it becomes essential to make sure that such profit motives do not come in the way of honouring claims made by the individuals.

Hence, the Government of India created the Insurance Ombudsman scheme to allow individual policyholders to have their complaints resolved out of the courts in a cost-effective, timely, and impartial manner.

With such a system in place, people have the assurance that the system is fair to them and that they can fully trust it and benefit from it. This also results in an optimal growth for the insurance sector, so it is a win-win situation for all.

Let’s understand the role of an insurance ombudsman in this article.

Who is an Ombudsman?

The word Ombudsman sounds overwhelming. But, it is not.

An Ombudsman is an officer appointed by the Government of India. At the moment, there are 17 Insurance Ombudsman working in different parts of the world. Any person having a grievance against an insurance company may, himself or by his legal heir, nominee, or assignee, write an official complaint to the Insurance Ombudsman.

However, you can approach the Ombudsman with complaint if:

  • The first step you took was to contact your insurance company with the complaint.
  • It has been rejected by the insurance company or
  • It has not been resolved to your satisfaction or
  • For the last 30 days, the insurer has not replied to the compliant at all
  • This complaint relates to an individual policy that you have taken and the claim amount including expenses claimed does not exceed Rs 30 lakhs.

You can complain to the Ombudsman about:

  1. Claims that are not settled within the specified time period, outlined in the IRDAI Act, 1999.
  2. Life, general, or health insurers have totally or partially rejected claims.
  3. Disputes about premiums paid or payable under an insurance policy
  4. The document or contract containing the policy terms and conditions has been misrepresented, any time.
  5. A legal construction of insurance policies in relation to a dispute over a claim.
  6. Grievances against insurance companies, their agents, and intermediaries related to policy servicing.
  7. Issue of life insurance policies, general insurance policies, and health insurance policies that do not conform to the proposal submitted by the proposer.
  8. Failure to issue an insurance policy after receiving a premium in life insurance and general insurance, including health insurance, and
  9. In any case resulting from violations of the Insurance Act, 1938, or regulations, circulars, guidelines, or instructions issued by the IRDAI from time to time, or the terms and conditions of the policy contract, insofar as they relate to the issues described at clauses (a) to (f).

The Process of Settlement - The Role of Insurance Ombudsman

  • Recommendation: The Ombudsman will serve as a mediator and do as follows:
    • Based on the facts of the dispute, make a fair recommendation
    • As soon as you accept this as a full and final settlement, the Ombudsman will notify the company that it must comply with the terms within 15 days.
  • Award: In the event a settlement by recommendation fails, the Ombudsman takes the following steps:
    • After receiving all of the requirements from the complainant, pass an award in 3 months which will be binding on the insurance company.
  • After the Award is Passed: Within 30 days of receiving the award, the insurer must comply with the award and notify the Ombudsman of its compliance.

Parting Thoughts

Providing financial security to insured individuals in times of need is one of the basic principles of insurance companies like Future Generali India Life Insurance.

In purchasing an insurance policy, a customer puts their trust and faith in our company, believing that we will honour their claim in the future. We strive to maintain this trust at its most fundamental and ethical level. If you need help making a financial decision, our trusted financial advisors will be glad to assist you.

Nevertheless, we hope this helped you understand the role of an ombudsman in insurance.