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Government amends Insurance Ombudsman Rules, 2017 ‘Insurance Ombudsman (Amendment) Rules, 2021

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regarding insurance service deficienciesOn March 2, 2021, the Central Government amended Insurance Ombudsman Rules, 2017 by exercising the powers conferred under section 24 of the Insurance Regulatory and Development Authority Act, 1999. The amended rules are called as ‘Insurance Ombudsman (Amendment) Rules, 2021‘.

Why these rules are amended?

These were amended to have a better a sight of policyholders’ complaints regarding insurance service deficiencies and to improve the working of the Insurance Ombudsman mechanism.

  • It should be noted that the Ombudsman mechanism was administered by the Executive Council of Insurers, which is now renamed as the Council for Insurance Ombudsmen.

Electronic form of complaint:

To strengthen the timeliness and cost-effectiveness of the Insurance Ombudsman mechanism, a complaints management system is created through which policyholders file complaints electronically to the Ombudsman and can can also track the status of their complaints online.

  • The Ombudsman may use video-conferencing for hearings.

Insurance Brokers brought under Ombudsman mechanism

Insurance brokers have been brought within the ambit of the Ombudsman mechanism, by empowering the Ombudsmen to pass awards (verdict) against insurance brokers as well.

  • Insurance broker: An individual who has been granted a certificate of registration as an insurance broker by the Insurance Regulatory and Development Authority of India (IRDAI). He/She advises people on their insurance needs and negotiates insurance contracts on their behalf with insurers.

Appointment of Insurance Ombudsman

Insurance Ombudsman shall be appointed by the Council for Insurance Ombudsmen on the recommendations of the Selection Committee. Their key eligibilities are:

  • To be a Insurance Ombudsman, a person is not less than fifty-five years but not exceeding sixty-five years of age
  • An Insurance Ombudsman shall hold office for a term of three years or till he attains the age of sixty-eight years, whichever is earlier.
  • To secure the independence and integrity of the Ombudsman selection process, the selection committee will now include an individual with a track record of promoting consumer rights or advancing the cause of consumer protection in the insurance sector.
  • When there is a vacancy in the office of a particular ombudsman, provision has been made for giving additional charge to another ombudsman.

Background:
As per Insurance Regulatory and Development Authority of India’s (Irdai’s) annual report for FY20, banks and brokers received close to 10,000 mis-selling complaints each. In 2018-19, banks received more than 12,000 mis-selling complaints. The report further observed that complaints being disposed of in favour of the complainant has marginally come down to 25% in 2019-20 from 27% in 2017-18.

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About Insurance Regulatory and Development Authority of India (IRDAI):

Establishment– 2000 (As Statutory Body)
Chairman– Subhash Chandra Khuntia
Headquarters– Hyderabad, Telangana