How An Insurance Ombudsman Can Help A Policyholder

Picture this, you have been paying premiums for years on your insurance policy to secure your family’s future or your own health. However, when the time comes for you to make a claim, you find yourself stuck with either a delay, denial, or dispute, leaving you in great financial stress. What would you do in such a situation?

Policyholders should know that whenever they are facing issues with claim settlements, they have the option to reach out to the insurance ombudsman for grievance redressal.

What Is An Insurance Ombudsman?

The insurance ombudsman, introduced by the Government of India, aims to provide individual policyholders with a platform to resolve disputes outside the cumbersome court system. It is cost-effective, efficient, and impartial in its settlement.

At present, there are 17 insurance ombudsmen spread across the country. Any policyholder who has a grievance against an insurer can reach out to the ombudsman either himself/herself or through his/her legal heirs, nominee, or assignee, and make a complaint in writing.

The complaint is submitted to the insurance ombudsman within the territorial jurisdiction of the branch or office where the insured has complained (against the insurer) or the residential address or place of residence where the complainant is located.

Who Can Approach The Ombudsman?

The insurance ombudsman isn’t a first stop – it’s the next step if your insurance company fails to address your grievance.

Here’s when you can knock on the ombudsman’s door:

• You have lodged a complaint with your insurer, and they have either rejected it, failed to resolve it to your satisfaction, or left you hanging without a response for 30 days.

• Your grievance concerns an insurance policy purchased in an individual capacity (not for business purposes).

• The value of your claim, including expenses, is within Rs 30 lakh.

What Can You Complain About?

From the nitty-gritty of claim delays to broader issues of misrepresentation, here’s what the ombudsman can help you with.

Delays In Claim Settlements: If your delays in resolving your grievance beyond the time specified by the Insurance Regulatory and Development Authority of India (Irdai), you can approach the insurance ombudsman.

Claim Denial: You can approach the ombudsman in the event of a claim denial, be it partial or total repudiation by life, general, or health insurers.

Premium Disputes: Questions over amounts paid or payable are also resolved by the ombudsman.

Misrepresentation: If policy terms and conditions were misrepresented in the document or contract, you can approach the ombudsman.

Policy Servicing Issues: Any lapses by the insurer, agents, or intermediaries are resolved by the ombudsman.

Non-Issuance Of Policies: When you have paid the premium, but the policy has not been issued and the insurance company has failed to resolve the issue within the stipulated time, you can approach the ombudsman and air your grievance.

In short, if your grievance stems from a violation of the Insurance Act, 1938, or any Irdai guidelines, the ombudsman is your advocate.

How Does The Process Work?

Once you file your complaint with the ombudsman, they will assess the case and take either of the following steps:

Recommendation: Acting as a mediator, the ombudsman will attempt to reach a fair resolution based on the facts presented by you and the insurer. If you accept their recommendation, the insurer is obligated to comply within 15 days.

Award: If mediation fails, the ombudsman passes a binding award within three months. This decision, however, is enforceable only on the insurer while you retain the right to challenge it in court if unsatisfied.

It’s important to note that this mechanism is designed to be fair and impartial. Ombudsmen cannot handle cases where there’s a conflict of interest or personal stake.

Why Should You Consider The Ombudsman?

For policyholders, the ombudsman represents a breath of fresh air in the otherwise complex landscape of insurance. The process is free, and the outcomes are quicker than traditional legal routes.

A Case In Point

The Bombay High Court recently passed a judgment asking Irdai and the Ministry of Finance to tighten the monitoring of insurers’ compliance with ombudsman orders/rulings. The matter related to a case titled, Bharat Dedhia vs Union of India.

Bharat Dedhia (68) underwent coronary artery disease (CAD) surgery at Breach Candy Hospital. During the procedure, he incurred medical expenses of Rs 21.87 lakh. When he made the claim on this with his insurer, Oriental Insurance Company Limited, Dedhia faced a rejection.

Despite a directive from the insurance ombudsman on May 3, 2021, which instructed Oriental Insurance Company to pay Rs 27.13 lakh as a full and final settlement, the insurer denied to settle the payment raising objections over the claim amount. They cited that the claimed amount was ‘excessive’.

However, the court upheld the decision of the ombudsman to bring justice for the petitioner.

The Bigger Picture

The insurance ombudsman isn’t just a dispute-resolution mechanism; it’s a lifeline for many aggrieved policyholders. It offers the insured a chance to stand up for their genuine rights without the burden of legal expenses or the stress of prolonged legal battles.

So, the next time you face a roadblock with your insurance company, remember to reach out to the insurance ombudsman for your concerns.