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Govt amends Insurance Ombudsman Rules, empowers policyholders

By TIOL News Service

NEW DELHI, MAR 03, 2021: TO facilitate speedy and cost-effective resolution of policyholders' complaints regarding deficiencies in insurance services, the government on Tuesday notified comprehensive amendments to the Insurance Ombudsman Rules, 2017.

The change in the rules will improve the working of the Insurance Ombudsman mechanism by enlarging the scope of complaints from mere disputes to include deficiencies in service on the part of insurers, agents, brokers and other intermediaries. In a significant move, insurance brokers have been brought within the ambit of the Ombudsman mechanism as well.

The Executive Council of Insurers who administered the Ombudsman mechanism, has been renamed as the Council for Insurance Ombudsmen.

"Under the amended rules, the timeliness and cost-effectiveness of the mechanism has been substantially strengthened," said the Ministry of Finance in a statement.

Policyholders will now be enabled for making complaints electronically to the Ombudsman and a complaints management system will be created to enable tracking the status of the complaint online. The Ombudsman can also use videoconferencing facilities for hearings.

To enable access to relief through the Ombudsman mechanism even when there is vacancy in the office of a particular Ombudsman, provision has been made for giving additional charge to another Ombudsman, pending the filling of the vacancy.

A number of amendments have been made for securing the independence and integrity of the Ombudsman selection process, while also building in safeguards to secure the independence and impartiality of the appointed persons while serving as Ombudsmen.

Further, 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.

The Insurance Ombudsman scheme was created by the government for policyholders to have their complaints settled out of the courts in a cost-effective, efficient and impartial way.

The Committee on Subordinate Legislation headed by Lok Sabha members found that 74 per cent of the complaints made to the Ombudsman were declared non-acceptable and non-maintainable. Moreover, the 17 Insurance Ombudsman centres have a large number of pending cases with not enough staff to timely dispose of the complaints.