Insurance is like marriage. You pay, pay, pay, and you never get anything back
The institution of ombudsman was first established in Sweden
1809. Ombudsman is a Scandinavian word. It means commissioner or officer.
Whose duty is to investigate and report to parliament on allegation against
administration. One of the founding principles of insurance companies is to
provide financial security to the insured individuals in the time of need. When
someone purchases an insurance policy, they put their trust and faith in the
company, believing that their claim will be honoured when the time comes. At the
most fundamental and ethical levels, such confidence must be maintained.
However, it cannot be denied that insurance companies across the world function
with the primary aim of generating profit, and it becomes essential to make sure
that such profit motives do not come in the way of honouring claims made by the
individuals. To make sure that the process of making claims is smooth and
hassle-free, the Indian government has formed the Insurance Ombudsman. It aims
to speed up the addressing of any grievance that a buyer might have against the
Both private and public insurance comes under the purview of Insurance
Ombudsman. Having such a system in place ensures that there is a fair place for
everyone and that people can wholly put their trust forward in the system and
reap the benefits that it has to provide. In this way, the insurance sector sees
an optimal growth as well, and this is a win-win situation for all.
History of Insurance Ombudsman scheme in India:
Prior to the establishment of Insurance Ombudsman for insurance grievances.
Insured has to resolve their grievances through Consumer Courts, Arbitration or
Civil Courts. Already huge load of cases were pending before these courts and
courts fees also high. It will result in pending of cases for long period of
time. Peoples were dissatisfied with these processes. So there is need for
separate mechanism for grievance redressal. Like a quasi judicial body.
1995 Reserve bank of India has established banking ombudsman scheme to resolve
the complaints of the customer. This resulted in positive outcomes therefore
government prompted to come out with a similar system for Insurance sector as
well. Central government exercising power under sec 114(1) of The Insurance Act
1938 established insurance ombudsman by passing Redressal of public grievances
rules in 1998.
The main purpose of this ombudsman is to create faith and
confidence among the public and insured through speedy disposal of grievances in
a cost effective, impartial and efficient manner. Insurance ombudsman was a
quasi judicial body. Both public and private Insurance Company comes under the
Insurance Ombudsman. There is no fee to be paid for filing complaint before
Insurance Ombudsman. Only individual aggrieved insured only can file complaint
against insurer in Insurance Ombudsman. In 2017 redressal of public grievances
rules was modified and insurance ombudsman rules were passed for better
resolution of policy holders complaints.
Now individual, members of group policy
and MSME can file before Insurance Ombudsman. In 2021 government made
comprehensive amendments in insurance ombudsman rules to improve the working of
insurance ombudsman mechanism. ICT (Information and Communication Technology)
was introduced. So Policy holder can now file complaint through online and
enable the policy holder to track the status of their complaints online.
Insurance brokers, agents and other intermediaries also brought under the ambit
of ombudsman scheme in deficiencies of Insurance Service. It enables the
ombudsman to pass awards against them as well.
Qualification of Insurance Ombudsman:
A person appointed for insurance ombudsman should not be less than
55year of age but not exceed 65year of age at time of application.
- He should be a member of civil service or all India service of the union
and should held a post of joint secretary or equivalent to the Government of
- He should served at least 25years in the insurance industry and has held
post not less than one level below that of a director of board.
An insurance ombudsman will hold the office for a term of three years or till he
attains the age of 70years, whichever is earlier. But he is not eligible for
Appointment of Insurance Ombudsman:
The insurance ombudsman shall be appointed by the council of insurance
ombudsman on the recommendations of the selection committee. Currently there are
17 Ombudsman functioning in all over India.
Removal of Insurance Ombudsman:
An ombudsman may be removed from office on the ground of gross
misconduct during his term of office by the council for insurance ombudsman. The
word gross misconduct includes (physical incapacity, or unsoundness of mind, or
insolvency, or conviction for an offence involving moral turpitude, or
engagement in any other paid employment, or conflict of interest, or furnishing
false information for selection process or omits to specify material facts).
Powers and functions of Insurance Ombudsman:
- The ombudsman shall receive and consider complaints or disputes
- To decide what procedure to be followed.
- Settle disputes without hearing parties based on facts.
- Dismiss the case if the complaint has no merit.
- Ombudsman important function is award making.
- Ombudsman must act fairly and equitably.
- Ombudsman should not decide the case when he has interest over the
- The ombudsman shall act as counsellor and mediator relating to matters
where there is written consent of the parties to the dispute.
- Central Government or IRDAI can refer matter to the insurance
Grounds for complaints before Insurance Ombudsman:
- delay in settlement of claims, beyond the time specified in the
regulations, framed under the Insurance Regulatory and Development Authority
of India Act, 1999;
- any partial or total repudiation of claims by the life insurer, General
insurer or the health insurer;
- disputes over premium paid or payable in terms of insurance policy;
- misrepresentation of policy terms and conditions at any time in the
policy document or policy contract;
- legal construction of insurance policies in so far as the dispute
relates to claim;
- policy servicing related grievances against insurers and their agents
- issuance of life insurance policy, general insurance policy including
health insurance policy which is not in conformity with the proposal form
submitted by the proposer;
- non-issuance of insurance policy after receipt of premium in life
insurance and general insurance including health insurance;
- any other matter resulting from the violation of provisions of the
Insurance Act, 1938 or the regulations, circulars, guidelines or
instructions issued by the IRDAI from time to time or the terms and conditions of the policy
Procedure for complaints:
- Any person who has a grievance against an insurer, may himself or
through his legal heirs, nominee or assignee, make a complaint in writing to
the Insurance Ombudsman within whose territorial jurisdiction the branch or
office of the insurer complained against or the residential address or place
of residence of the complainant is located.
- The complaint shall be in writing, duly signed by the complainant or
through his legal heirs, nominee or assignee and shall state clearly the
name and address of the complainant, the name of the branch or office of the
insurer against whom the complaint is made, the facts giving rise to the
complaint, supported by documents, the nature and extent of the loss caused
to the complainant and the relief sought from the Insurance Ombudsman.
- No complaint to the Insurance Ombudsman shall lie unless:
- The complainant makes a written representation to the insurer named in
the complaint and
- Either the insurer had rejected the complaint; or
- The complainant had not received any reply within a period of one month
after the insurer received his representation; or
- The complainant is not satisfied with the reply given to him by the
- The complaint is made within one year
- After the order of the insurer rejecting the representation is received;
- After receipt of decision of the insurer which is not to the
satisfaction of the complainant;
- After expiry of a period of one month from the date of sending the
written representation to the insurer if the insurer named fails to furnish
reply to the complainant.
- The Ombudsman shall be empowered to condone the delay in such cases as
he may consider necessary, after calling for objections of the insurer
against the proposed condonation and after recording reasons for condoning the delay and
in case the delay is condoned, the date of condonation of delay shall be deemed
to be the date of filing of the complaint, for further proceedings under these
- No complaint before the Insurance Ombudsman shall be maintainable on the
same subject matter on which proceedings are pending before or disposed of
by any court or consumer forum or arbitrator.
After 2021 amendment to insurance ombudsman rule 2017 ICT (Information and
Communication Technology) was introduced for complaint redressal. So now insured
can file complaint through online without paying any fees. It enables the
insured to track the status of their case and video conference hearings. These
amendments will strengthen the timeliness and cost-effectiveness of the
Award under Insurance Ombudsman rule:
Insurance Ombudsman cases:
- Where the complaint is not settled by way of mediation, the Ombudsman
shall pass an award, based on the pleadings and evidence brought on record.
- The award shall be in writing and shall state the reasons upon which the
award is based.
- Where the award is in favour of the complainant, it shall state the
amount of compensation granted to the complainant after deducting the amount
already paid, if any, from the award:
Provided that the Ombudsman shall:
- not award any compensation in excess of the loss suffered by the
complainant as a direct consequence of the cause of action;
- not award compensation exceeding rupees thirty lakhs
(including relevant expenses, if any).
- The Ombudsman shall finalise its findings and pass an award within a
period of three months of the receipt of all requirements from the complainant.
- A copy of the award shall be sent to the complainant and the insurer
named in the complaint.
The insurer shall comply with the award within thirty days of the receipt of the
award and intimate compliance of the same to the Ombudsman.
The complainant shall be entitled to such interest at a rate per annum as
specified in the regulations, framed under the Insurance Regulatory and
Development Authority of India Act, 1999, 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 award of Insurance Ombudsman shall be binding on the insurers.
Appeal against Ombudsman:
- Insurance Ombudsman (Bhubaneswar) 
Insurer alleging suppression of material fact concerning health and
pre-existing illness by the life assured.
Findings of the case:
Insurer could not prove beyond doubt that life assured suffered from
serious illnesses before taking the policy.
Insurer was directed to settle the claim within one month from the receipt
of the consent letter.
- Insurance Ombudsman (Ahmedabad) 
While taking the policy life assured had informed in great detail the
state of his health and habits due to which several special reports were called
for and the proposal was accepted with extra premium.
Findings of the case:
The life assured died within ten months from the date of
proposal. The claim was repudiated on the grounds of suppression of material
facts on the basis of certificate of treatment, prescription, letters of doctor
and hospital. It was observed that all the diagnosis/treatment commenced after 7
days from the date of acceptance of risk. All the documents proved that the
deceased was not aware of his ailment at the time of taking the proposal.
The insurer was directed to pay the full amount.
- Insurance Ombudsman (Chennai)
The insurer alleging non disclosure of material fact of suffering
from Acute Lymphoblastic Leukaemia (ALL) with relapse with refractory disease in
the proposal form and hence the claim is repudiated.
Findings of the case:
The deceased had been undergoing treatment for ALL since 2000 and
he underwent Orchidectomy for relapse in 2003. Did not disclose this in proposal
form submitted in Dec 2005.
There is clear medical evidence to show that the deceased was
suffering from Leukaemia well before signing the application for insurance.
Hence the complaint is dismissed and the decision of the insurer was upheld.
In case a complainant is not satisfied with the award of an
Insurance Ombudsman he can exercise his right to take recourse to the normal
process of law against the insurance company. However, the award of Insurance
Ombudsman shall be binding on the insurers.
Insurance Ombudsman scheme in other countries:
Insurance and Financial Service Ombudsman scheme was introduced in the year 1995
to redress the consumer dispute with an insurer. The Insurance & Financial
Services Ombudsman Scheme (IFSO Scheme) is free and independent and handles
complaints from customers about financial service providers. Complaints can be
about loans, superannuation, health and life insurance, car insurance, contents
insurance, house insurance and investments.
One of the common disputes the IFSO deals with is alleged non-disclosure to the
insurer of all material information. Non disclosure means you may lose your
The IFSO when investigating claims relating to non-disclosure often provides
independent underwriters with the information disclosed and asks if the
non-disclosed information would have altered the decision to offer insurance or
the terms (e.g. exclusions or price). If the missing information would not have
made a difference then it is not a material non-disclosure.
Before you go to the IFSO you need to have gone through your providerís internal
disputes resolution process. If you cannot resolve matters internally you should
ask for a notice of deadlock. You provide this notice to the IFSO to show you
have completed the providerís internal process.
If your provider is a member of the IFSO scheme you can complete the IFSO
complaint form. Send that in with your notice of deadlock and any other
supporting documents to the IFSO by post or email.
Once the IFSO receives your complaint they will obtain your file from your
insurer and make any other inquiries. A Case Manager will investigate your
complaint, discuss issues with you and get any expert assistance they need.
The IFSO may try to resolve your complaint by negotiating mediation or
conciliation. The IFSO provides the conciliators and mediators and they will
ensure any resolution is fair and reasonable.
If a resolution is not agreed the Case Manager will make a decision on the
outcome of your complaint. If both parties accept the outcome this becomes
final. Either party can request the IFSO to review the outcome if new
information or grounds exist. The IFSO will not review the matter just because
you donít agree with the outcome.
If you do not accept the outcome you can take your dispute to the Disputes
Tribunal or to Court. The IFSOís Award is binding on your insurer/financial
services provider and they must comply with the outcome. You are entitled to be
represented throughout the IFSO investigation process.
Each year IFSO will respond to 3000 complaints every year and resolve about 300
AFCA (Australian financial Complaints Authority) considers complaints that
previously would have been handled by the Financial Ombudsman Service. They
consider complaints about.
- Credit, finance and loans.
- Banking deposits and payments.
- Investments and financial advice.
AFCA role is to assist the consumers and small business to reach agreements with
financial firms about how to resolve their complaints. More or less their
process and settlement of dispute are same as other.
FOS (Financial Ombudsman Service) was established to solve disputes between
consumer and insurance company.
The complaints they deal are:
- Extended warranties
- Home insurance
- Medical insurance
- Motor insurance
- Pet insurance
- Travel insurance
There no need to pay any amount for settlement of disputes. It also has the same
procedure like others.
In 2021 Jeetendra Ghadge RTI activist from Mumbai filed application before IRDAI
(Insurance Regulatory and Development Authority) seeking details about the
insurance ombudsman scheme and action taken. Replying to his query on action
taken against insurance companies for not-complying with the award or orders of
the insurance ombudsman IRDAI says no action has taken against the insurance
company for non-compliance with the award.
This shows that when it comes to providing relief to consumers, IRDAI, like most
other regulators, curls up in a shell. Even after the office of insurance
ombudsman passed orders and gave awards, for the past 10years there is zero
action by the insurance regulator against any insurer for not complying with it.
This highlights how much importance is given to consumer grievance redressal by
In 2019-20, around 1,864 awards are pending with the private and public
insurance companies for implementation. Public sector Insurance Company is at
the forefront of non-compliance of insurance award.
Non-complying with the award passed by the insurance ombudsman by insurance
company will create fear and loss of faith among the public. It will defeat the
main objective of the scheme. After analysing of insurance ombudsman scheme it
is clear that settling of consumer grievances is very effective in comparing to
civil courts. In comparing to other countries we have separate Ombudsman to deal
with Insurance grievance. In FY19-20 38538 complaints were received by insurance
ombudsman out of 29816 were disposed only 8722 were outstanding.
This shows the
effectiveness of insurance ombudsman in settling the consumer grievance. But
the only problem with Insurance Ombudsman is in implementation of award. Once
the award is passed by the insurance ombudsman against the insurance company it
has to implement the award within 30 days or 60 days for appeal. Even though
insurance ombudsman award binding on the insurance company, some company refused
to implement the award.
If the insurance company failed to implement the award
Ombudsman has no power to take action against that insurance company. This will
defeat the main purpose of the ombudsman scheme. It will eventually lead to the
loss of faith in the system. The IRDAI should shut down the Ombudsman if the
awards are thrown in the trash by the insurance companies, why waste time of
poor victims having insurance-related grievances? Let them approach the consumer
courts or civil courts instead. If IRDAI really intends to help citizens, action
must be taken against insurance companies who do not comply with the awards.
- The Insurance Act 1938
- Redressal of Public Grievances Rules 1998
- The Insurance Regulatory and Development Authority Act 1999
- The Insurance Ombudsman Rule 2017
- The Insurance Ombudsman Rule (Amendment) 2021
- IRDAI Journal December 2019 volume XVII, No 1
- https://www.policyholder.gov.in/FAQ_on_Ombudsman_Scheme.aspx#:~:text=21)%201s%20there%20any%20appeal,final%20settlement%20of%20the%20complaint 03/06/2021.
- https://www.ifso.nz/ 04/06/2021.
- https://www.afca.org.au/make-a-complaint/insurance 04/06/2021.
- https://www.financial-ombudsman.org.uk/business/complaints-deal/insurance#:~:text=Business%20and%20consumer%20advisers%20can,us%20on%200800%20023%204567 04/06/2021.
- https://www.moneylife.in/article/for-10-years-irdai-took-no-action-against-any-insurer-for-not-complying-with-orders-passed-by-insurance-ombudsman/63092.html 05/06/2021.
Written By: V.Ragul
- Journal Irdai December-2019 Volume Xvii, No.1
- Banking Ombudsman Scheme 1995
- Insurance Ombudsman Rule Amendement 2021.
- Insurance Ombudsman Rule 2017
- Insurance Ombudsman Rule Amendment 2021.
- Reference Case No: 21-002-0217
- Reference Case No: 21-001-0314
- Reference Case No: Io(Chn)/21.006.2420.
L.L.M (Business Law) - Government Law Colleage,
Author id: 12769