The Center on Tuesday announced amendments to the Insurance Ombudsman Rules for quick and low cost resolution of complaints about shortages in insurance services.
The new regulations will extend the scope of complaints from insurance and agents, brokers and other intermediaries to ombudsmen for service defects and disputes between insurance companies.
Under the new rules, the Executive Council of Insurance will be taken over by the Insurance Ombudsman Council. In an important move, the new rules will bring insurance brokers under the ombudsman’s.
Last year, a parliamentary panel suggested that the rules were changed because the disposal and grievance redressal system needed to be changed in the form of insurance manpower because it was not in favor of the disputants.
A senior official of the Financial Services Department said that under the new rules, the timing and cost-effectiveness of the system in favor of purchasing insurance policies has been significantly strengthened. Policyholders can now lodge a complaint with the Ombudsman digitally and a grievance management system will be created to track their grievance status online.
The ombudsman video conferencing facility can be used to resolve disputes. “The amended rules not only create a framework, but also ensure the uniqueness and integrity of the ombudsman selection process and build protective measures to protect the personality and impartiality of the persons appointed while serving as ombudsman,” the official said. .
The Ombudsman Selection Committee will now include those with a track record of promoting consumer rights in the insurance sector or improving consumer protection.
Responding to the notification, the Mumbai-based insurance company owner said that for the first time these regulations would bring about specific insurance-friendly changes, such as providing an online management system for lodging and tracking complaints to ombudsmen.
Why did the government change the rules?
The Financial Services Division under the Ministry of Finance has set up a panel to review the Insurance Ombudsman Regulations, 2013.
According to the 2017-18 annual report of the Insurance Regulatory Authority of India (IRDA), the Lok Sabha Subordinate Law Committee reported on September 22, 2020 that 74 per cent of complaints made to insurance locals were unacceptable and unsafe. 1 Insurance Most cases are pending at the local insurance center, the report said. This prevents insufficient staff power to resolve complaints against insurance companies in a timely manner.
The Parliamentary Panel was of the view that the Loksul rules were not sufficient to meet the objectives of the Insurance Regulatory and Development Authority Act 1999 to protect the interests of policyholders or insurance companies.
The Financial Services Department then acknowledged the shortcomings of the regulations and expressed its interest in reviewing and amending the rules. The panel recommended that the law be amended within three months of the completion of the review.
The parliamentary committee also expressed serious concern about the controversy over the role played by locals. The committee flagged that it failed to strike the right balance between protecting the interests of policyholders and insurers.
The Executive Council – which plays a key role in appointing ombudsmen and formulating policies – consists of nine members of the Insurance Council, seven members of the insurance industry.
The Parliamentary Panel Report strongly commented, “The Committee came up with the idea of portraying the insured person as an agent of a conflicting insurance company with an interest in fulfilling his / her responsibilities.