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Grievances of Policy-holders & Insurance Ombudsman

Category : IRDA-Life Insurance IC-33

An Insurance Ombudsman is an official appointed by government, who is responsible for protecting the interests and settling grievances of policy holders. Institute of ombudsman was created by Government of India in 1998 for individual policyholders to have their complaints settled out of the courts and it is generally appointed to act as an impartial judge who listens to both the sides and gives recommendations to settle the dispute. Thus main objective behind appointing ombudsman is to settle the grievances and complaints of policy holders outside court system in a cost-effective, efficient and impartial manner. It puts consumer’s faith in the insurance companies and ensures that insurance companies are accountable in their transactions.

The governing body of insurance council issues orders of appointment of the Insurance Ombudsman on the recommendations of the committee comprising of IRDA Chairman, LIC Chairman, GIC Chairman and a representative of the Central Government. Ombudsman is selected from Insurance Industry, Civil Services and Judicial Services. An Insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of sixty five years, whichever is earlier. Re-appointment is not permitted.

In India, government has appointed 12 Ombudsman across the country. The insurance Ombudsman offices are located at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9) Ahmedabad, (10) Lucknow, (11) Mumbai, and (12) Hyderabad. Claimants who could not get their complaints redressed by insurers may get in touch with the Ombudsman relevant to their states.

Functions of ombudsman

Ombudsman have mainly two functions, firstly ombudsman is responsible for reconciliation or settlement of a grievance between customer who has lodged the compliant and the insurance company and secondly to award compensation to the complainant. The awards that Ombudsman India announces are mandatory on the Insurance companies. Ombudsman acts as like a customer advocate to protect the customer interest by taking care of their claim they are entitled to and deserve. Ombudsman also monitors the insurance companies whether they are working under the rules and regulation of the government. Ombudsman function also includes taking a consumer advocacy position with respect to pending policy changes or availability of insurance coverage.

Procedure to lodge complaint

Policy holders cannot directly lodge their complaint with the insurance ombudsman. They have to first lodge the complaint with the insurance company about their problem. If insurance company doesn’t respond to complaint within 30 days or if policy holder is not satisfied with the response of insurance company about the complaint, he/she can approach to insurance ombudsman within a month after the response of insurance company. Policy holder cannot lodge a complaint if the same case is pending before any court, any consumer forum or arbitrator. Insurance ombudsman accepts only written complaints.

Complaint filing procedure can be summed-up as:

  • You have first approached your insurance company with the complaint, and
    • They have not resolved it, or
    • Not resolved it to your satisfaction, or
    • Not responded to it at all for 30 days.
  • Your complaint pertains to any policy you have taken in your capacity as an individual, and
  • The value of the claim including expenses claimed is not above Rs. 20 lakh.


Complaints that can be lodged to ombudsman:

  1. Non-payment of any partial or total valid claim by an insurer.
  2. Any dispute about premium paid or payable in terms of the policy.
  3. Any dispute on the legal construction of the policies as far as it relates to claims.
  4. Delay in settlement of claims.
  5. Disagreement between the interpretations of the policy wordings.
  6. Non-issue of any insurance document to policyholder after he/she pays premium.

Settlement Process

After receiving the complaint insurance ombudsman acts as a counselor and mediator and makes fair recommendation based on the facts of dispute and send copies of recommendation to both the parties within a month. If complainant agrees with the recommendation he/she has to send a reply within 15 days after receiving the recommendation. If Ombudsman has recommended that the complainant is entitled to an award then the insurance company is liable to pay it. The payment has to be made within 3 months of the receipt of the recommendation.

Award of an insurance ombudsman is binding on the insurance company but not binding on the policyholder. The Ombudsman can also award an ex-gratia payment.

If complainant disagrees with the recommendation he/she can send a reply of rejecting recommendation to insurance ombudsman and insurance company and can approach to other forums like consumer forum etc.

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