Have an insurance complaint? Read this

Is your insurance company taking you for a ride by delaying or repudiating in settling your claim? You need not spend sleepless nights now. The Insurance ombudsman office will take care of the problem.

Established by Insurance Regulatory and Development Authority, ombudsmen are arbitrators for insurance related disputes, to be resolved quickly and at a low cost. Today, there are 12 offices of ombudsmen across the country.

Prior to the setting up of the office of the insurance ombudsman before November 1999, one had to file a case with a consumer forum or go for a civil suit. Both steps were expensive and time-consuming.

Functions

In November 1998 a notification was issued by the government for setting up the ombudsman's offices in the country. The representatives of various insurance companies transacting life and non life insurance business in the country formed an insurance council. That insurance council was empowered to appoint the insurance ombudsmen in the country and the insurance council.

The entire process of arbitration has been kept simple. Any insurance-related complaint can be filed. For now, however, the ombudsman entertains only complaints in respect of claims up to Rs 20 lakh (Rs 2 million) relating to individual life or non-life policies, so long as they are of a non-commercial nature.

Once a complaint is filed and the ombudsman finds a prima facie case, a response is sought from the insurer within 14 days. With that, the redressal mechanism gets going. The claim may be settled in one of the three ways: immediate settlement on reference; settlement following mediation; and settlement through mediation and award.

Mediation becomes necessary when the insurer contests the complainant's claim before the ombudsman. In such cases, the ombudsman investigates the complaint and gives guidelines for a settlement within a month. A copy is sent to both parties. If the recommendation is acceptable to the petitioner, (s)he must confirm his/her acceptance within 15 days to enable a final settlement of the claim.

The ombudsman directs the insurer to implement the recommendation within 15 days. Likewise, if the insurer accepts the recommendation, it has to comply within 15 days.

However, if the insurance company does not comply with the recommendations, the ombudsman can declare an award, which has to be honoured within 15 days of receiving the acceptance letter from the complainant.

Is the award binding? The IRDA has the power to exempt an insurance company from the authority of the ombudsman only if the company has a credible alternative arbitration mechanism. No insurer has yet sought such exemption.

Significantly, an ombudsman's award is not binding on the complainant; so if the verdict does not uphold your claim, you still have the option of approaching a court of law or a consumer forum. But, remember: you may be on infirm ground if the insurer cites the ombudsman's ruling to buttress its case.

How to file a complaint

There is no prescribed format for filing complaints. All it requires is for you to submit your complaint in writing, stating the facts, with documentary proof to back your claim. If your complaint is taken up, the settlement process will get under way without even requiring your presence.

Only if the case goes to the mediation stage will you be required to attend a hearing at the ombudsman's office, to present your case. And you don't need a lawyer to represent you.

The process is simple. First file a written complaint with the insurer company. You must file the complaint with the ombudsman within a year of the rejection of your claim by the insurer. The ombudsman intervenes only if you've not moved any court or approached a consumer forum. You must file your complaint with the ombudsman who has jurisdiction over the region in which you have bought the policy.

The complainant, or any person on his behalf, can lodge a complaint with the ombudsman giving a brief account of what exactly are his grievances.

However, before looking at the complaint, the ombudsman has to see a few points like whether it is really a time barred complaint as the complaint has to be filed within a year of rejection of a claim by the insurer.

Another point to be kept in mind is that before coming to the ombudsman the complainant should have made a representation to the insurance company and received a reply which is not satisfactory or the representation has been rejected or there is no reply at least for a month or so.

The most important thing is that he should not have gone to any other forum before coming to the ombudsman, for example, a consumer forum, etc.

The reason for ensuring that the complainant has not already gone to any other forum before coming to the ombudsman as an alternate avenue he has already been thought of by him so the ombudsman then has no powers to entertain him.

Suppose a consumer forum has already rejected the complaint; can the complainant then approach the ombudsman? Certainly not, as either it has already been rejected or it is pending, the ombudsmen cannot entertain the complaint.

What are the restrictions for the ombudsman?

The restrictions are that they cannot just complain against anything under the sun; they can complain only about a few items which have been prescribed in the notification. Claims include the delay in the time to settle the claim. Suppose a company takes a very long time to settle the claims, they can come to the ombudsman.

There is also a clause which says that they can come to an ombudsman on the legal construction of the policies in so far as they relate to claims or to non-issue of documents after the receipt of premium.

Premium itself can be a subject matter of dispute: premiums paid or premiums payable. So check before you file your complaint. You can file you complaint with the ombudsman responsible for your area.