Complain to insurance firm first

Pushpa Girimaji

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IT’S over two decades since the insurance ombudsman scheme came into existence in the country under the Redressal of Public Grievances Rules 1998. Yet, till today, consumers have not understood a simple prerequisite for dispute resolution before the Ombudsman — that they have to first approach the insurer with their complaint and go to the Ombudsman only if the insurance company fails to resolve or act on it within the stipulated time.

In fact, if you look at the statistical data pertaining to the work of the 17 Insurance Ombudsmen in the country, you will be horrified at the number of complaints that get rejected as ‘non-entertainable ‘ under Rule 14 (3) (a) of the Insurance Ombudsman Rules. As per the Annual Report of the Council for Insurance Ombudsmen for the financial year 2021-22, for example, ‘non-entertainable’ complaints at 22,049 were far higher than the ‘entertainable’ ones at 18,898! And the highest number of rejections at 14,831 were due to the fact that the consumer had not first approached the insurer for complaint redress!

It was no better in 2020-21 where ‘non-entertainable’ complaints at 13,060 were almost equal to ‘entertainable’ complaints at 13,237. Here again, the highest number of rejects at 8,475 were because the insured went to the Ombudsman without first complaining to the insurance company.

Rule 14 (3) (a) says: “No complaint to the Insurance Ombudsman shall lie unless — (a) The complainant has made a representation in writing or through electronic mail or online through website of the insurer or insurance broker concerned named in the complaint and — (i) Either the insurer or insurance broker, as the case may be, had rejected the complaint; or (ii) The complainant had not received any reply within a period of one month after the insurer or insurance broker, as the case may be, received his representation; or (iii) The complainant is not satisfied with the reply given to him by the insurer or insurance broker, as the case may be.”

I do not blame policyholders for their lack of knowledge of this basic pre-condition for filing a complaint before the Ombudsman. But I do hold the insurers primarily responsible for their failure to create that consumer awareness. Surely, it is not such a difficult task for insurance companies to put out this information on their websites, prominently on their policy documents (also giving details of their grievance redress mechanism), through their intermediaries and through advertisements across media.

The Insurance Regulatory and Development Authority of India as well as the office of the Council for Insurance Ombudsmen should also take up this consumer education work. In fact, the website of the Council for Insurance Ombudsmen (http://www.cioins.co.in), where you can register your complaint with the Ombudsman online, tells you the pre-conditions before registration. But obviously, that is not catching the attention of the consumer. So it might be a better idea to spread the information through advertisements on various media. The complaint registration software can also be programmed to reject complaints of those who have not gone to the insurer first, so that the consumer does not waste time filing it before the Ombudsman.

The fact that consumers are approaching the Ombudsman without first seeking such redress from the insurer also shows the consumers’ lack of trust in the insurer’s willingness to address their grievances. In fact, some of the observations of the Ombudsmen on the grievance redress machinery of the insurers, is highly revealing. Under “Common observations/suggestions/recommendations of Ombudsmen regarding quality of service rendered by insurers and causes of grievances”, the annual report 2019-20 says: “It is observed that the Grievance Redressal Mechanism of the Insurers has become prototype (with the same stereo-typed letters sent from all the escalation levels) without properly addressing the grievances raised by their customers/complainants.”

With reference to health insurance, the Ombudsmen say: “Most general insurers do not have any established system for review of the claims rejected by their TPAs (third party administrators.) So much so that when a complainant, whose claim is rejected by the TPA, approaches the insurance company, they seldom examine the claim dispassionately.”

In other words, the message from the large number of ‘non-entertainable’ complaints is loud and clear: (a) Insurance companies must put in place an independent, transparent, effective, in-house grievance redress machinery that actually scrutinises complaints and reviews decisions impartially. And they must also publicise the nature of complaints received by them and how they were handled by the in-house complaint redress mechanism. (b) Consumers must be made aware that they can go to the Ombudsman only after they have exhausted the first recourse available to them for redress.

Complaints before the Ombudsman also sometimes get rejected because the consumer files the complaint before the consumer forum as well as the Ombudsman. Rule 14 (5) says, “No complaint before the Insurance Ombudsman shall be maintainable on the same subject matter on which proceedings are pending before or disposed of by any court or consumer forum or arbitrator.”