Insurance ombudsman orders binding only on firms

There are considerable misgivings with regard to the processing and settlement of insurance claims. To address these and the grievances arising thereof, the department of insurance, ministry of finance, framed the redressal of public grievances (RPG) rules, 1998, under which 12 insurance ombudsmen are appointed throughout the country on a regional basis to deal with the grievances of individual consumers for claims up to Rs 20 lakh. What happens if a consumer is not happy with the decision of the ombudsman? Can the aggrieved then approach the consumer forum? Some consumer forums initially ruled that a complaint could not be filed after reconciliation before the ombudsman. This view was erroneous and resulted in stone-walling a consumer seeking justice. The national commission, however, has held otherwise (Kamleshwari Prasad Singh v/s National Insurance Company Ltd).

 

A bus was plying from Giridh to Dumka. While on a bridge over the river Ushri in Bihar, its tyre burst and the steering went out of control. The bus fell into the river and was swept away. For this loss, a claim was lodged with the insurance company but it was rejected. The insured then approached the insurance ombudsman, who upheld the rejection. The insured, thereafter, filed a complaint before the district consumer forum.

The insurer raised several technical and legal defences. Firstly, it contended that the complaint was indefensible, as it had been rejected by the ombudsman, who is a quasi-judicial authority. Secondly, the consumer forum could not act as an appellate authority, presiding over the decision of the ombudsman. The forum, however, over-ruled these. So, the insurer now appealed to the state commission which upheld the objections and dismissed the complaint. Against this order, the consumer approached the national commission by filing a revision petition.

The national commission disagreed with the insurer's contention that the ombudsman's role was quasi-judicial in nature. It observed that traditionally and historically, the role of the ombudsman was to protect the interests of the citizens and to assist consumers to settle their differences with the suppliers of goods and services informally and quickly.

Analysing the various provisions of the RPG rules, the national commission held that the ombudsman is appointed by the government and the industry, and his role is to act as a counsellor and a mediator. If mediation fails, then he can make an award which he thinks is fair. The insurer is then bound to comply with it, only if the consumer agrees to accept it. Thus, it is up to the consumer to choose whether or not to accept the award.

Accordingly, the national commission held that if a consumer was not satisfied with the ombudsman's decision, he would be entitled to approach the consumer forum.

A consumer can thus safely approach the ombudsman, without having to fear that such a complaint might block the avenue for redressal by the consumer forum. The national commission's interpretation will thus go a long way in helping a consumer fight for justice.

The author is a consumer activist