Chapter 20 – Grievance Redressal Mechanism
Importance of Customer Protection: Insurance agents are the representatives of the insurance company as far as the policyholders are concerned. They are the link between the insured and the insurer. It is hence essential that insurance agents understand the importance of customer protection measures.
Insurance agents must carry out their functions honestly and in a transparent manner. They must always act in the best interests of their customers. Good customer relations are important for the following reasons:
- Insurance agents become popular for their service and are thus recommended to others by their existing customers
- Losing a customer would mean loss of additional income to the agent
- Good customer service goes a long way in promoting the role of an agent as a customer’s representative in the insurance company
Objectives of the Insurance Ombudsman
The Insurance Ombudsman was created in November 1998 by the Government of India to resolve the grievances of insurance customers. It was started as a means of protecting the interests of the insured and maintaining the confidence in the insurance system.
The main objectives of the Ombudsman are:
- Ensuring speedy resolution of claims and disputes
- Resolution of complaints in a cost effective, impartial and efficient manner
- Allowing the insured to approach the Ombudsman for any unresolved complaints IRDA has launched an Integrated Grievance Management System (IGMS), which acts as a central
repository of insurance grievance data and as a tool for monitoring grievance redressal in the industry.
Consumer disputes redressal agencies are established in each district and state and at national level.
As far as insurance business is concerned, the majority of consumer disputes fall into categories such as delay in settlement of claims, non-settlement of claims, repudiation of claims, quantum of loss and policy terms, conditions and so on.
The Ombudsman, by mutual agreement of the insured and the insurer can act as a mediator and counselor within the terms of reference.
If the dispute is not settled by intermediation, the Ombudsman will pass award to the insured, which he thinks is fair, and is not more than what is necessary to cover the loss of the insured.