Executive Summary – Filling a complaint against insurance company is now much easier than before. For the benefit of consumer IRDA started a separate department as Insurance Ombudsman in 1998. This was set up to provide faster and cheaper solution of all the grievances of policy holder against insurance companies. Dispute amounting to Rs. 20 Lakhs are handled by Ombudsman. This article explains how Insurance Ombudsman works and what is the process to file a complaint with Ombudsman.    
 
Naresh bought his dream car last Diwali. He was saving money to get this car from last many years. Everything was going good until one day his car got damaged. Very next day he submitted his car to the showroom for repairing. He was sure that the insurance company will bear the expenses as his policy covered everything and he has paid extra to avail such policy. Soon he was informed by the showroom that insurance company has approved the claim but only 60%. He will have to bear the rest 40% of the total repairing cost. He was surprised to know because during his insurance purchase he was informed that policy will cover all the expenses and each and every part of car is insured. He then approached the insurance company where he was informed that he will only get 60% of claim and they cannot cover the whole claim amount. He felt cheated and decided to approach court. He was informed by his lawyer friend that such cases are first handled by Insurance Ombudsman. If case is still not solved then complainant can approach court.
 
So what is Insurance Ombudsman? What types of cases are handled and what is the process to file case with Insurance Ombudsman?        
 
Insurance Ombudsman is a government department which was set up by IRDA in 1998. The main purpose of setting up this department was to provide smooth and fast solution of all the grievances of policy holders be it of life or general insurance. It was generally seen that complainant used to approach consumer forum against the insurance company which use to take lot of time. Hence this department was created exclusively for insurance complaints. The ombudsman can deal with cases valued up to Rs. 20 lakh. Cases valuing more than Rs. 20 lakh are not handled by ombudsman. The policyholder has to directly approach a consumer court. The ombudsman only plays a role when the policy holder has not gone to a court or a consumer forum. The Ombudsman also do not charge anything against the complaint lodged.
 
Types of cases handled by Insurance ombudsman:

• When there is a dispute in the amount of premium payable or those which are already paid.
• When there is a dispute in the amount of claim settled. Mostly happens in the case of health insurance.
• When there is a delay in settlement of claims i.e. the claims have not been settled beyond the time period specified in the regulation or in the contract.
• The insurance document is not as per the terms decided after the payment of premium.
• There is non-issuance of insurance policy even after paying the premium for life insurance or general insurance.
• One might feel that the policy wasn’t explained properly once it was sold – case of mis-selling.
• Grievances related to the insurance agents or intermediaries.

Please note: Grievances related to non-individual insurance are not handled by Ombudsman
 
Steps of filing a complaint to ombudsman (Applicable for both general and life insurance)

• When a claim is denied from the insurance company the policyholder writes a letter to the grievance redressal department of that particular company.
• Within one month , if the policyholder doesn’t receive any response from the insurance company; or does not get a satisfactory reply; then within one year of receiving the final communication from the insurer, the policy holder can file a complaint to the insurance ombudsman of the respective Jurisdiction. If it is more than one year, then the complaints are not taken into account.
• While filing a complaint, the policy holder has to write a letter a mentioning the policy number, the details of the complaint and the date along with which necessary policy documents like claim form, claim document, details of the claim received, the reply from the insurer, etc. have to be attached.
• The ombudsman then responds within a span of 15 days and listens to both the parties i.e. the policy holder and the insurance company.
• An executive from ombudsman office is appointed to solve the dispute of the 2 parties.

 
How does Insurance Ombudsman work?

• When a complaint is lodged with Ombudsman, first he may make a recommendation after listening to both the parties.
• The copy of recommendation is then sent to both the parties
• The recommendation should be made within one month of receipt of complaint.
•  If complainant is satisfied with the recommendation then he has to submit the acceptance within 15 days of receipt of recommendation.
• On the receipt of such acceptance from the complainant, Ombudsman then sends the copy of recommendation with acceptance letter to insurance company.
• Insurance company then within 15 days of receipt of the acceptance letter will have to comply with the recommendation.  

 
What if above process does not solve the case?

• If the complaint is not settled in above manner then Ombudsman can pass an award (in monetary terms) which he thinks is correct and reasonable considering the case. 
• This award is passed within 3 months of receipt of complaint and copy is sent to both the parties.
• If the complainant is comfortable with the amount of award then he has to send the letter of acceptance to the insurance company.
• The insurance company then within 15 days will pass the award to the complainant and inform the Ombudsman.
• The insurance companies cannot deny the payment of award to the complainant.
• If the policyholder is not satisfied with the ombudsman award, then one can approach consumer court.

 
 
Conclusion: –

Insurance Ombudsman is the cheapest and fastest way to get complaint resolved against insurance companies. Although Insurance Ombudsman was set up as a department 20 years back, still many people don’t know about it. Before approaching to higher court or forum one should register a complaint with ombudsman and if not satisfied by the solution then one can approach to consumer forum. One should remember that it is not necessary for complainant to accept the decision of an ombudsman but at the same time it is compulsory for an insurance company to accept the decision and compensate the complainant. So next time if you feel you are cheated or insurance company has done something wrong with you file a complaint with Insurance Ombudsman.