Do Insurance Companies have Excessive Rights in Choosing Ombudsmen?

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There is a 9-member board which has been entrusted with the supervision and administration of the Insurance coverage Ombudsman’s job. Out of these 9 people, 7 members are Insurance coverage corporation representatives. This indicates that a highly powerful role is played by the ECI (Executive Council of Insurers) when it comes to Ombudsman appointments. In fact, this throws up questions as to the unbiased nature of the appointment when it is clearly driven by a clique of the Insurance coverage sector. This has already been highlighted in a report on the country’s health Insurance sector by the National Institute of Public Finance and Policy. This report also stated that funding for the ombudsman’s job also comes from the Insurance coverage sector itself.

While this is highly ironical, the fact remains that the Insurance companies should not have any say whatsoever when it comes to the ombudsman’s appointment. This is because they are parties who have specific interests when it comes to any disputes with those who are insured. As a result, an ombudsman appointed by Insurance companies will naturally rule in favour of these corporations instead of impartially judging these cases. The ECI only has 2 members from the IRDAI (Insurance Regulatory and Development Authority of India). There was a reformation of the legislation back in 2017 for having a separate committee for choosing the ombudsman.

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However, the selection guidelines are formulated and approved by the ECI and applicants who are eligible are also shortlisted accordingly. There are only 17 Insurance coverage ombudsmen for the country which is too small a number. In March this year, all the Insurance coverage ombudsmen’s offices were vacant, as noted by the Fair Play in Health Insurance in India report. Some offices were vacant for up to 2 years or even more as seen last year. This has led to a huge piling up of cases. The ombudsman’s office was vacant for two years in Mumbai between 2016 and 2018 as per reports. 9 out of the 17 posts, namely Kolkata, Ahmedabad, New Delhi, Bhubaneshwar, Ernakulam, Noida, Lucknow, Pune and Patna, continue to remain vacant.

Also Read:  Vernacular Declaration to protect the interest of Policyholders

The regulations of the IRDAI still do not have clear processes outlined for the settlement of claims or the redressal of grievances of customers when claims have been rejected. The regulations only have the time period outlined within which there must be a settlement and the submission style for declare documents. Every Insurance coverage corporation has already come up with its own in-house processes for tackling customer grievances and disputes are not always settled as per the legislation but mostly on ad-hoc bases. The document mentioned earlier also cites the story of one Virender Dhiman to highlight how there are no consequences faced by Insurance companies if they reject claims which are valid.

Virender Dhiman’s declare claim was rejected by his Insurance company when his mother had a bad fall and was hospitalized. The company’s ground for rejection was that his mother did not require any hospitalization in spite of the approved healthcare provider having certified that she required the same. The declare amount that was rejected was Rs. 80,461/- However, the fine for the Insurance company was only Rs. 5,000/- There are no serious consequences for these companies in case they reject valid claims and hence they go on violating regulations. Experts feel that in order for such actions to be stopped, the penalties should be higher than the sum rejected.

If you are struggling with an Insurance Claim rejection and not getting enough support from the Ombudsman, we at InsuranceSamadhan.com are here to help. In numerous instances, we have helped our clients recover their due claims by fighting their cases in the right route at the insurer’s end. If you need assistance, feel free to register on our website – https://www.insurancesamadhan.com/register – and we will get back to you to know more about the case and fight it out with the insurers, as the need be.

Shailesh Kumar

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