India Plans Review Of Insurance Ombudsman Rules After Panel Flags Flaws
The rules deal with complaints of policyholders against insurers.
The government has proposed a review of insurance ombudsman or dispute redressal system to make it robust and transparent after a parliamentary panel flagged deficiencies.
The Department of Financial Services, Ministry of Finance proposed to set up a panel to review the Insurance Ombudsman Rules, 2017, according to a report of committee on Subordinate Legislation. The rules deal with complaints of policyholders against insurers.
The Committee on Subordinate Legislation headed by Lok Sabha member Raghurama Krishnaraju Kanumuru said 74% of the complaints made to the ombudsman were declared non-acceptable and non-maintainable, according to 2017-18 annual report of the insurance regulator IRDAI. India has 17 insurance ombudsman centres that, according to the report, have a large number of pending cases, and do not have sufficient staff strength to timely disposr of complaints against insurance companies.
The panel said the ombudsman rules are not sufficient to carry out the objectives of the Insurance Regulatory and Development Authority Act, 1999 to protect the interest of policyholders.
The Department of Financial Services acknowledged the deficiencies in the rules, and is willing for a review and bring suitable amendments, the report said.
The panel recommended that the department should complete the review and amend the law within three months.
Conflict of Interest
The panel also flagged conflict of interest in duty of ombudsman as protector of policyholders’ interest, and the interest of the insurers.
The report said that Executive Council of Insurers—that has a substantial role in appointment of ombudsman and formulating policies of —has seven out of nine members from the insurance industry.
"The committee gathers an impression that … depict insurance ombudsman as an agent of insurers leading to conflict of interest in the discharge of his/her duties to act impartially, fairly and independently in protecting the interests of the policy holders,” the report said.
There is an urgent need for independent and impartial insurance ombudsman in the country, the committee said.