“My two claims were rejected within a year. The ombudsman made a ruling in my favor in the first claim, but when they discovered that a company had helped me in the first claim, they did not hear my case and gave the ruling against me in the second,’ Garg said.
Garg’s situation highlights a significant challenge in the system. Although the policyholder and the insurance company are given the opportunity to present their case, neither can engage an attorney or other third party.
For most policyholders, navigating this process can be daunting. After an insurance company has denied a claim, the policyholder’s first step is to approach the insurer’s complaints handling department. If the problem is still not resolved, they can contact the ombudsman. The date of the hearing is fixed (online or physical) and both parties present their arguments.
Not a level playing field
You do not have to pay any fees to file a complaint with the Insurance Ombudsman. It is a cost-effective system where claims amount to ₹50 lakh can be resolved faster. However, people who are unaware of its existence or who do not understand the process sometimes seek help from third parties. Ombudsman officials generally cannot learn from it, but when they do, they can portray it in a negative light.
A few complainers told us Mint they were asked to write a letter stating that they would not pay any money to third parties. Mint has seen such a copy.
“I was told that my case is genuine, but I am still not receiving my claim because I sought the help of an agency in submitting my case to the Ombudsman. I have a full-time job. My husband has health problems. none I don’t understand insurance. If I sought someone’s help in doing the paperwork to ease my mental burden, why is that wrong?’ said a person on condition of anonymity because her case is sub-judice in the consumer court.
Consumer policy expert Bejon Misra, member of the Insurance Ombudsman’s advisory committee, highlighted the lack of a level playing field between insurers and policyholders.
“Insurers may not send lawyers to the ombudsman’s office, but whoever represents them before the ombudsman has a rich insurance background and access to expert lawyers in the business or has a legal background. It is a battle between an ordinary man and a great entity. You cannot question complainants if they are represented by insurance experts. In fact, Irdai (Insurance Regulatory and Development Authority of India) should allow representation if complainants so wish,” he said.
Also read: Your Rights in Life and Health Insurance Claims: Unpacking the Moratorium Clause
What the ombudsman says
Ombudsmen fear that this will damage the free nature of the system. “Ombudsman officers are impartial and understand that policyholders cannot present their case as structurally as an insurance company would,” said RM Singh, who retired as insurance ombudsman of Madhya Pradesh and Chhattisgarh in November.
“People have to trust it. Most complaints to the ombudsman are in favor of complainants. Of late, it has been observed that small agencies have mushroomed asking policyholders to help them. It should not be encouraged otherwise it would become part of the process and gullible policyholders could be fooled by unscrupulous players,” he said.
Policyholder Arjun Singh trusted the system and approached the ombudsman at his location. But he was disappointed.
“It was clear that the ombudsman was biased against the insurance company representative. The chief of the ombudsman insulted me and did not let me speak. Too much paperwork was done with the insurance company and the ombudsman to get my claim,” said Singh .
Milind A. Kharat, who worked as insurance ombudsman for Mumbai and Goa, says the aim of the insurance ombudsman is speedy resolution of insurance complaints, with complainants not having to bear any costs. Consumer courts involve legal costs, such as attorney fees and stamp duty, and still result in delayed settlement.
Also read: Mistakes people make when switching health insurance
What about non-legal help?
Sumit Bohra, president of the Insurance Brokers Association of India, said brokers should at least be allowed to represent their clients. “We have raised the matter with the regulator as our customers contact us if they encounter any issues in settling claims. If we want to ensure that illegal players do not fool policyholders, the regulator should recognize a few entities that can provide such support. if they look for it,” Bohra said.
There are 17 ombudsman offices in India. Data shows that in FY 2023-24, they resolved 49,705 complaints, of which 16% were in favor of complainants, 15% in favor of companies, 6% complaints were withdrawn, 23% were unacceptable and 27% recommendations were also called recommendations. mediation.
“The ombudsman hereby makes fair recommendations to the complainant. If he accepts it, it will be forwarded to the insurance company for compliance. In such cases, an actual hearing between the complainant and the insurance company is not necessary and may even lead to a quick resolution. It could be in favor of the complaint or the insurance company, or half way,” said Kharat.
Also read: India’s insurance reforms: a bold transformation, but not without challenges
Data shows that 67.40% of complaints, including awards and mediation, favored complainants in FY24.
A detailed analysis revealed that Mumbai, Bengaluru and Jaipur were the top states where prices were in favor of the complainant. Delhi ranks lowest in this regard with only 53 awards going in favor of the complainants, compared to 612 in favor of the insurance company.
Looking at expenditure, the ombudsman’s offices spend on average ₹12,000 per complaint to handle the complaints, which was more than double earlier. The Insurance Ombudsman receives money from insurance companies based on their turnover. Misra suggests that the costs of handling complaints should be recovered directly from the insurance company against which the complaint is registered. “It would encourage insurers to resolve complaints at their end and policyholders would not have to contact the ombudsman in the first place,” Misra said.
Kerala-based Ajit Kumar faced a different challenge. He filed a complaint against an online brokerage platform with the ombudsman, but the ombudsman did not handle it. “They told me they needed a record of my communications with the broker platform’s complaints officer. The broker platform does not have such an officer. “I have emails from the CEO, but the ombudsman has requested my communication details with the complaints officer,” he said.
To be fair, estate agents have only recently come under the ombudsman’s jurisdiction, but most of them do not have a designated complaints officer like insurance companies.
“The ombudsman should deal with Ajit Kumar’s complaint by accepting a claim denial certificate from a claims manager of the concerned broker if it does not have a complaints officer. However, Irdai should make it mandatory for brokers to have a designated grievance officer to bring symmetry in operations, otherwise the decisions will be based on the perceptions of each ombudsman,” said RM Singh.
Also read: Top five private non-life insurers: a comparison
