Insurance Ombudsman for Life Insurance Claims

What the Ombudsman is

The Insurance Ombudsman is an office set up under the Insurance Ombudsman Rules, 2017 to resolve complaints against insurers. It charges no fee. It is open to individuals, members of group policies, sole proprietorships and micro enterprises.

It sits between the insurer's own grievance process and the courts. For a claimant whose death or maturity claim has been rejected, delayed or short-paid, it offers a decision without the cost of litigation.

The steps before it

A complainant must first complain to the insurer. Under IRDAI's rules the insurer has to resolve a complaint within 14 days, and a complaint can also be registered on IRDAI's Bima Bharosa portal.

The Ombudsman can be approached in three situations: the insurer rejects the complaint, gives an unsatisfactory reply, or does not reply within one month. The approach has to be made within one year. The matter must not be pending before a court, a consumer commission or an arbitrator.

Mediation, award and compliance

The Ombudsman first tries mediation. Where the parties agree to it, the Ombudsman makes a recommendation within one month. Otherwise the Ombudsman passes an award, within three months of receiving all the requirements from the complainant.

An award can be for up to ₹50 lakh. The limit was raised from ₹30 lakh by an amendment to the Rules effective 10 November 2023, so older material quotes ₹30 lakh.

The award binds the insurer, which must comply within 30 days, and under IRDAI's 2024 master circulars a penalty of ₹5,000 a day applies to delay. The complainant is not bound. A complainant who is not satisfied may still go to a consumer commission or a court.

The consumer commission route

Consumer commissions under the Consumer Protection Act, 2019 are the other forum commonly used for insurance disputes. Their jurisdiction depends on the consideration paid, which for insurance is the premium, not on the claim amount: the District Commission where it is up to ₹50 lakh, the State Commission above ₹50 lakh and up to ₹2 crore, and the National Commission above ₹2 crore. A complaint has to be filed within two years of the cause of action.

The two routes cannot run together: a matter pending before a consumer commission cannot be before the Ombudsman at the same time.

Rules at a glance

Key points

• The Insurance Ombudsman resolves complaints against insurers free of cost under the Insurance Ombudsman Rules, 2017.
• A complaint must go to the insurer first; the Ombudsman can be approached after rejection, an unsatisfactory reply or no reply for one month, within one year.
• The Ombudsman can award up to ₹50 lakh, raised from ₹30 lakh from 10 November 2023.
• An award is to be passed within three months and binds the insurer, which must comply within 30 days.
• The complainant is not bound by the award and may still go to a consumer commission or court.

Common misunderstandings

• The Ombudsman is not the first stop: the complaint must go to the insurer first.
• The ₹30 lakh limit is out of date: awards can be up to ₹50 lakh since 10 November 2023.
• An award does not bind both sides: it binds the insurer, while the complainant may still go to a consumer commission or court.
• Consumer commission jurisdiction does not follow the claim amount: it follows the consideration paid, that is the premium.

Questions people ask