Complaints pile up at Mumbai insurance ombudsman office

Ombudsman post lying vacant since last October

At least 2,500 complaints are lying with the Insurance Ombudsman’s office here for a decision. And, it will take more than a year to clear these. Reason: There is no ombudsman. The post has been vacant since October 2012. Given the backlog, it could take up to a year to clear just the pending cases, before the new ones could be perused.

The institution was created through a November 11, 1998 notification to quickly dispose grievances of insurance customers. According to this notification, the ombudsman shall pass an award within three months from receipt of a complaint. The awards are binding upon insurance companies. If the policy holder is not satisfied with the award, he can approach other venues such as consumer forums and courts of law.

The 90-day time frame to dispose cases was fixed in 1998, when there were only five insurance companies. Although this number has gone up, the number of ombudsmen across the country still remains 12. With 50-plus insurance companies in the country for the life and non-life insurance sector, on an average, the time taken to resolve a complaint ranges from six months to nine months.

J Hari Narayan, chairman of the Insurance Regulatory and Development Authority (Irda), said since 100-plus applications have come for the post of the ombudsman, it was taking a longer time to decide. “A new ombudsman will be appointed by next month,” he said.

Sector experts said there was a proposal to have five more ombudsmen. However, Irda officials said this proposal was still being examined and no decision had been taken.

Sources in the ombudsman’s office said till last year, 62 per cent of complaints were from the non-life sector and 38 per cent from the life segment. However, there has been a gradual shift with 52-54 per cent coming from non-life and 46-48 per cent from life. Among life, unit-linked plans (Ulips) accounted for the highest number of complaints, with issues related to high net asset value (NAV) products topping the list.

Insurance sector players said although the Ulip guidelines were introduced in September 2010, the repercussions were still to be seen. “Many insurers and their agents have promised high returns on certain Ulip products. However, due to adverse market conditions, these returns may not be achieved by consumer. So, there is a tendency of customers to complain,” said the CEO of a private life insurance firm. He, however, added, these complaints were not tenable, since companies do not guarantee these returns in the policy document.

Irda has taken steps to curb insurers from selling high NAV-based Ulips. Hari Narayan said such products were bad for customers and, hence, all approvals for these products had been stopped. He said Irda was in the process of bringing out regulations for curbing sale of high NAV products and these would soon be gazetted.

On the non-life front, health insurance complaints topped the list, with most of these relating to late filing of documents.

“When such complaints reached the Ombudsman’s office, they were decided in favour of the customer. So, the Ombudsman told insurance companies that henceforth, claims should not be repudiated merely citing late submission of claims. This has led to a fall in such claims,” said an official in the ombudsman’s office here.