Irdai proposes internal ombudsman to address claims up to ₹50 lakh

The ombudsman will apply to insurers with over three years of operations, be empowered to handle claims up to Rs 50 lakh, and offer time-bound grievance redressal

The Insurance Regulatory & Development Authority of India (Irdai) on Wednesday proposed setting up an internal insurance ombudsman for insurance companies -- except reinsurers-- with over three years of operation, to address unresolved complaints. The ombudsman will have power to hear complaints for claims up to ₹50 lakhs.

 

The insurance regulator said that it has proposed to issue Irdai (Internal Insurance Ombudsman) Guidelines 2025, in order to facilitate an effective and speedy resolution to the grievances and to further improve the standards of the complaint management system.

 

“The draft guidelines propose the establishment of an independent and impartial review mechanism within insurers to address unresolved or escalated complaints in a fair, transparent, and time-bound manner. Applicable to all insurers (except reinsurers) with more than three years of operations, the framework mandates the appointment of an internal insurance ombudsman to address complaints involving claims up to ₹50 lakh,” Irdai said in a statement.

 

“Insurers may also appoint more than one internal insurance ombudsman, with well-defined jurisdiction, to ensure effective coverage and responsiveness,” Irdai added.

 

According to the draft, the person shall be qualified for the appointment of internal insurance ombudsman only if he has served for at least 20 years in the insurance industry and has held a post not less than two levels below that of the Director of a Board.

 

The person also should not be working or should not have worked with the insurer or companies in the group to which the insurance company belongs, where the person is going to be appointed.

 

The appointment of internal insurance ombudsman shall be for a fixed term of three years or till the age of 70 years whichever is earlier.

 

The minimum age at entry shall not be less than 55 years. The ombudsman will report to the managing director/CEO of the insurer administratively, and to the Board or (Policyholders' Protection & Grievance Redressal) PPGR &CM Committee functionally.

 

According to the proposed norms, the internal insurance ombudsman will consider the complaints which have not been responded to by the insurer within 30 days of receipt of complaint, those complaints which are partly or wholly rejected complaints on which the complaints have preferred an appeal.

 

In each case, the ombudsman must record a “reasoned decision” which shall be binding on the insurer.

 

Irdai further said, “A complainant aggrieved by the decision of the internal insurance ombudsman of an insurer may within 30 days of the date of receipt of communication of the decision prefer an appeal before the insurance ombudsman in accordance with the Insurance Ombudsman Rules. 2017.”

 

The guidelines will be applicable within three months after the date of its issuance. All the stakeholders are asked to submit their comments and suggestions on the proposed regulations on or before August 17, 2025.