Dear Sir/Ma'am,
With an objective to provide a forum for resolving disputes and complaints from the aggrieved insured public or their legal heirs against Insurance Companies, the Government of India, in exercise of powers conferred on it u/s 114(1) of Insurance Act, 1938 framed "Redressal of Public Grievances Rules, 1998", which came into force w.e.f. 11th November, 1998. These Rules aim at resolving complaints relating to the settlement of disputes with Insurance Companies on personal lines of insurance, in a cost effective, efficient and impartial manner. These Rules apply to all the Insurance Companies operating in General Insurance business and Life Insurance business, in Public and Private Sectors.
To implement the above Rules, the Institution of Insurance Ombudsman has been established and is functioning since 1999. The Ombudsman functions within a set geographical jurisdiction and can entertain disputes relating to partial/total repudiation of claims, delay in settlement of claims, any dispute on the legal construction of the policies in so far as such disputes relate to claims, disputes regarding premium paid or payable in terms of the policy and non-issuance of insurance documents.
Redressal through Ombudsman
“The ombudsman awards are binding on insurers. There may be a delay, but they have no option but to comply. Irdai as well insurance ombudsman offices monitor compliance closely and follow-up with insurers,” says Milind Kharat, Insurance Ombudsman, Mumbai office. You can enlist the intervention of these two entities again for resolving the matter, after allowing the company adequate time to comply, as outlined in the Ombudsman rules, 2017.
The maximum compensation that an insurance ombudsman office can award is Rs 30 lakh (including costs incurred by complainant), up from Rs 20 lakh prior to revision of rules. The offices are required to finalise the findings and pass an award within three months of receiving documents and other requirements from the policyholder. Next, a copy of the verdict is sent to both the complainant and the insurance company, which has to comply with the order within 30 days and inform the ombudsman.
The complainant shall be entitled to such interest at a rate per annum from the date the claim ought to have been settled under the regulations, till the date of payment of the amount awarded by the Ombudsman,” the rules stipulate. In case of delay, ensure that the insurer makes the compensation payout along with this interest. As per Protection of Policyholders Regulations, 2017, the interest rate will be two percentage points over the prevailing bank rate, which is currently 6.5%.
The settlement process-
1. Recommendation:The Ombudsman will act as mediator and
- Arrive at a fair recommendation based on the facts of the dispute
- If you accept this as a full and final settlement, the Ombudsman will inform the company which should comply with the terms in 15 days
2. Award:
- If a settlement by recommendation does not work, the Ombudsman will:
- Pass an award within 3 months of receiving all the requirements from the complainant and which will be binding on the insurance company
3. Once the Award is passed
- The Insurer shall comply with the award within 30 days of the receipt of award and intimate the compliance of the same to the Ombudsman.
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