New insurance ombudsman rules in the making; non-compliance may cost insurers up to Rs 20 lakh

The central government has issued a draft of major amendments to the Insurance Ombudsman Rules, 2017, including a proposal to change the term 'ombudsman' to 'insurance ombudsman'. The amendments include strict measures aimed at protecting the interests of policyholders, requiring insurance providers to pay up to Rs 20 lakh in compensation for any non-compliance.

The amendments are set to empower the ombudsmen in the insurance sector to pass awards against insurance brokers, broaden the scope of complaints beyond disputes to include service deficiencies and introduce a digital redressal system that enables electronic complaints with tracking and video conferencing for hearings.

Insurance ombudsman reforms

Add Zee Business as a Preferred Source

Here are 10 things to know about the key amendments to the insurance ombudsman rules:

• Insurance brokers and government scheme policies have been brought under the ambit of the ombudsman mechanism.
• The entire complaints process is now mandatorily online.
• The online platform will offer facilities for document uploads, tracking and mediation consent under the new system.
• The ombudsman must issue an acknowledgment within one day of receiving a complaint.
• The government has constituted an appellate authority in this regard, enabling the filing of appeals against ombudsman orders within 30 days.
• This authority must deliver its final decision within three months of receiving an appeal.
• There are provisions for strict action against insurance companies for non-compliance to the new laws.

Strict Ombudsman Rules in Insurance | Up to Rs 20 lakh compensation

• Insurers may have to pay up to Rs 20 lakh in compensation under the rules.
• The new rules also provide for compensation to be paid to customers for mental harassment. This compensation can be worth up to Rs 1 lakh.
• The amendments are aimed at improve the functioning of the existing ombudsman mechanism in the insurance space, facilitating timely, cost-effective and impartial resolution of complaints regarding deficiencies in insurance services.