Legal Escalation Process

What escalation means

Escalation means taking a claim dispute beyond the insurer's claims team. It goes first to the insurer's own Grievance Redressal Officer, and then to outside bodies: IRDAI's Bima Bharosa portal, the Insurance Ombudsman, the consumer commissions or the civil courts. These routes are open to a policyholder who believes a claim has been wrongly rejected, delayed or under-settled.

Inside the insurer, and IRDAI's portal

The first step is a written complaint to the insurer's Grievance Redressal Officer. An insurer must resolve a policyholder's complaint within 14 days of receiving it. This step matters for what follows: a complaint to the insurer is a precondition for approaching the Insurance Ombudsman and is expected before using IRDAI's portal, though the law does not require it before a consumer complaint.

Bima Bharosa is IRDAI's complaint portal; older material calls it IGMS, the Integrated Grievance Management System. It registers and tracks complaints and passes them to the insurer. IRDAI does not itself decide individual claims through it. Using the portal is free.

The Insurance Ombudsman

The Insurance Ombudsman, under the Insurance Ombudsman Rules, 2017, is free of cost and is open to individuals, group-policy members, sole proprietorships and micro enterprises. The complaint must first have been made in writing to the insurer and been rejected, answered unsatisfactorily or left unanswered for a month. It must be filed within one year, and the matter must not be pending before a court, consumer commission or arbitrator. The award is capped at ₹50 lakh, raised from ₹30 lakh by an amendment effective 10 November 2023.

Consumer commissions

Under the Consumer Protection Act, 2019 a policyholder can file a complaint before a consumer commission, and can do so directly. Which commission hears it depends on the consideration paid, which for insurance is the premium, not on the amount of the claim. Under the Consumer Protection (Jurisdiction) Rules, 2021, the District Commission hears complaints where the consideration does not exceed ₹50 lakh, the State Commission above ₹50 lakh and up to ₹2 crore, and the National Commission above ₹2 crore.

The complaint must be filed within 2 years from the date the cause of action arose, which in a claim dispute is generally the date the claim was rejected. The commission can condone a delay for sufficient cause. A complainant can present their own case, or act through an authorised representative, without engaging a lawyer. These bodies are commissions; older material calls them by other names.

The usual route

A retail policyholder with a claim grievance usually starts with the insurer's grievance officer. If the complaint is not resolved, it can be registered on Bima Bharosa, and the policyholder can go to the Insurance Ombudsman, if eligible, or to a consumer commission. The same matter cannot be before the Ombudsman while it is pending before a court, consumer commission or arbitrator.

Rules at a glance

Key points

• The first step is a written complaint to the insurer's Grievance Redressal Officer, which the insurer must resolve within 14 days.
• Bima Bharosa (formerly IGMS) registers, tracks and routes complaints; IRDAI does not decide individual claims.
• Bima Bharosa and the Insurance Ombudsman are both free of cost.
• The Ombudsman's award is capped at ₹50 lakh since 10 November 2023.
• Consumer commission jurisdiction depends on the premium paid: District up to ₹50 lakh, State up to ₹2 crore, National above that.
• A consumer complaint is filed within 2 years of the cause of action, and no lawyer is required.

Common misunderstandings

• Bima Bharosa does not decide claims: it registers and tracks the complaint and passes it to the insurer.
• Consumer commission jurisdiction is not fixed by the claim amount: it depends on the consideration paid, which for insurance is the premium.
• The ₹30 lakh Ombudsman cap is out of date: it has been ₹50 lakh since 10 November 2023.
• A complaint to the insurer is not a legal precondition for a consumer complaint, though it is for the Ombudsman.

Questions people ask