A majority of complaints received in the life insurance category by the insurance ombudsman pertain to mis-selling of insurance policies via several intermediaries. However, in the non-life insurance segment, a majority of complaints pertain to rejection of health insurance claims on pre-existing ailment grounds.
As per the recent ECOI (Executive Council of Insurers) annual report, mis-selling comes from forging of the signature of the proposer on application forms or even through the sale of long-term insurance plans although proposers do not have capabilities of maintaining these policies beyond the initial payment for the same. ECOI works as the facilitator for the Insurance Ombudsman institution in the country.
IRDAI has made it compulsory for insurance companies to always follow up with customers via verification calls. However, the report has stated that brokers and agents among other intermediaries have been teaching customers to accept all the terms and conditions whenever they get any verification calls. As per the ECOI secretary general M M L Verma, throughout the country, complaint numbers are almost similarly divided amongst non-life insurance and life insurance. Post the amendment made to the rules earlier, the insurance ombudsman can pass regulations against intermediaries and insurance companies. Orders can be issued against banks although the insurer will hold responsibility since the agents/brokers are their representatives.
The ombudsman office is the best platform for tackling all complaints made by customers since there are no fees involved and no lawyers needed for redressal. Customers can easily register complaints through emails. The awards for mis-selling of insurance policies are basically restricted to premium refunds since penalties cannot be imposed by the ombudsman. Another restriction pertains to the maximum award that can be issued by an ombudsman which is Rs. 30 lakh. However, it has already been recommended that since the ombudsman’s office takes up individual complaints, the limit should not be there since several people take health or term insurance coverage of Rs. 1 crore.
In addition to pre-existing ailments, another common reason for health insurance complaints involves rejection of claims on grounds of the expenditure not coming under the reasonable and customary charges as specified. This term is highly subjective and varies from one part of India to another. In several cases, claims for costly lenses are rejected by insurance companies during cataract operations. The report has stated that insurance companies should clearly disseminate the inadmissibility of the expenses pertaining to multi-focal lenses in case of regular cataract operations in the terms and conditions of health insurance policies in case this is not covered.