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Insurance Ombudsman: A shoulder to lean on when your insurer lets you down

There are 17 ombudsmen across the country to listen to your grievances and sort the issue out

Its nice to have a wise and friendly uncle who will sort out misunderstandings between you and your parents or siblings! When you have a problem with your insurance company, the Insurance Ombudsman is such an uncle. There are 17 of them across the country; their only job is to listen to your complaints and sort the issue out with your insurance firm. The advantage is that the ombudsman knows all about insurance and his quasi-judicial orders are binding on the insurance company. You, however, have further recourse.

If you have a grievance, you should approach the Insurance Ombudsman of your jurisdiction, depending on your place of residence. You can find the list of 17 ombudsmen and their contact and jurisdiction details on the website of the Council for Insurance Ombudsman set up by the government.

Firstly, the ombudsman entertains only complaints where the amount under dispute is less than ₹30 lakh. It should pertain to policies issued under personal lines of insurance, group insurance policies, and policies issued to sole proprietorships and micro-enterprises.

Any individual with an unresolved grievance against his insurance company can approach an ombudsman. The complaint can pertain to any policy purchased in his individual capacity like life, health, motor or property insurance, which are termed personal lines of business.

Proprietors of microenterprises can also approach the ombudsman with their insurance grievances. Microenterprises are defined as manufacturing units where investment in plant and machinery is not more than ₹25 lakh or service providers where the investment in equipment is not more than ₹10 lakh.

In both cases, the nominees, legal heirs or assignees of the policyholder can also approach the ombudsman.

Complaints can relate to claim settlement delay, partial or total repudiation of claims by the insurer, dispute over the premium paid or payable, misrepresentation of policy terms and conditions in the policy document or policy contract, any dispute on the legal construction of the policies in so far as such disputes relate to claims, grievances relating to policy servicing by insurers and their agents and intermediaries, issuance of life, general or health insurance policy not in conformity with the proposal form submitted by the proposer and non-issue of life, general or health insurance policy after receipt of premium.

You have to make the complaint in writing duly signed and with supporting documents. You can send it by fax or email but you need to send the hard copy too. A pre-condition is that you should have gone through the process of making a written representation to the insurer about your grievance.

When to complain

You can complain to the ombudsman within a year of the insurer either rejecting the representation or sending his final reply to it. In case the insurer fails to reply to your representation within a month of receiving it, you can approach the ombudsman a month after that. You cannot take a matter that is already before a court or consumer forum to the ombudsman and there is no provision for you to involve a lawyer in ombudsman complaints and there is no fee you have to pay anywhere in the process. What happens after you make a complaint?

If both you and the insurer agree for mediation, the ombudsman goes through the matter, conducts hearings of both parties if necessary, and makes a recommendation within a month of receiving all documents from you. If not, he will pass an award in three months. If the terms of the award are acceptable to you, it is binding on the insurance company which has to comply within 30 days.

The recommendation or award will be based on the principles of natural justice and the compensation can be up to the loss you have suffered because of the action of the insurer and cannot exceed ₹30 lakh, including expenses.

However, if you don’t find the award satisfactory you have the right to take recourse to the normal legal processes by approaching a consumer court or regular courts. The process has been constructed in such a way so as to put back some balance of power in favour of the individual consumer at odds with a large corporation to whom he has already paid premium, and from whom he is expecting succour at his time of need as promised by the insurance policy.

(The writer is a business journalist specialising in insurance and corporate history)

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