Dispute Resolution mechanism, Insurance ombudsman

25/04/2021 0 By indiafreenotes

If unsuccessful or dissatisfied with the insurer’s internal grievance redressal system, the aggrieved insured can register their complaint on IRDAI’s Integrated Grievance Management System. Post-registration, IRDAI forwards the complaint to the concerned insurer. If a resolution is not achieved in 15 days, the insured has the option of escalating and sending the complaint for re-examination or approaching the Insurance Ombudsman/civil court/consumer forum.

Section 89 of the CPC embraces a provision for the settlement of disputes outside court. All cases that are filed in court need not necessarily be decided by the court itself. Considering the time taken for legal proceedings and the limited number of judges available, it has become imperative to resort to an alternative dispute resolution (ADR) mechanism with a view to end litigation between parties at an early date. The ADR mechanism as contemplated by Section 89 is arbitration, conciliation or judicial settlement, including settlement through a Lok Adalat (a mode of ADR) or mediation. There is usually a mediation cell associated with each court.

Arbitration

The ACA is based on the UNCITRAL Model Law. The ACA preserves party autonomy in relation to most aspects of arbitration, such as the freedom to agree upon the qualification, nationality and number of arbitrators (provided this is not an even number), the place of arbitration and the procedure to be followed by the tribunal. The principle of party autonomy has recently been confirmed by the Supreme Court in a number of cases. The decisions restrict the scope of the Indian courts to intervene in respect of those arbitrations where the seat is non-Indian.

The Arbitration and Conciliation (Amendment) Act 2015 amended the ACA. This Act makes the ACA a preferred reference for settlement of commercial disputes, as it not only sets out strict timelines for completion of the arbitral proceedings but also permits parties to choose to conduct arbitration proceedings in a fast-track manner, with the award being granted within six months. In addition to the foregoing, a cost regime with regard to providing the costs of arbitration proceedings to a successful party has also been set out.

The ACA expressly bars the courts from intervening in an arbitral proceeding except to the extent this is provided for in the Act itself. For example:

  • Where a party files an action before a court in spite of an arbitration agreement, the other party can apply to that court to refer the dispute to arbitration instead;
  • A party can apply to a court for interim remedies;
  • A party can seek the court’s assistance for the appointment of an arbitrator if the other party refuses to cooperate in the process;
  • A party can seek the court’s assistance for recording evidence; and
  • The court can set aside an award in an arbitral proceeding where it has been passed following material errors of jurisdiction or in prejudice of the public interest. The court’s power is limited in this regard, and it cannot interfere in the reasoning given for arriving at the award.
  • ADR

The ACA recognises arbitration and conciliation as valid forms of ADR.

  • Mediation

The courts may direct the parties to refer their disputes to ADR with the parties’ consent. There are a number of mediation cells associated with the courts. The mediator is either selected by the parties or by the court. The mediator acts as a facilitator to encourage parties to settle their disputes. However, unlike arbitration, the mediation process is not binding on either party. The Commercial Courts Act contemplates compulsory mediation between the parties prior to filing of a suit unless urgent interim relief is sought.

Ombudsman

The Insurance Ombudsman scheme was created by the Government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way.

There are at present 17 Insurance Ombudsman in different locations and any person who has a grievance against an insurer, may himself or through his legal heirs, nominee or assignee, make a complaint in writing to the Insurance ombudsman within whose territorial jurisdiction the branch or office of the insurer complained against or the residential address or place of residence of the complainant is located.

You can approach the Ombudsman with complaint if:

  • You have first approached your insurance company with the complaint and
  • They have rejected it
  • Not resolved it to your satisfaction or
  • Not responded to it at all for 30 days
  • Your complaint pertains to any policy you have taken in your capacity as an individual and
  • The value of the claim including expenses claimed is not above Rs 30 lakhs.

Your complaint to the Ombudsman can be about:

  1. a) Delay in settlement of claims, beyond the time specified in the regulations, framed under the IRDAI Act, 1999.
  2. b) Any partial or total repudiation of claims by the Life insurer, General insurer or the Health insurer.
  3. c) Any dispute about premium paid or payable in terms of insurance policy
  4. d) Misrepresentation of policy terms and conditions at any time in the policy document or policy contract.
  5. e) Legal construction of insurance policies in so far as the dispute relates to claim.
  6. f) Policy servicing related grievances against insurers and their agents and intermediaries.
  7. g) Issuance of life insurance policy, general insurance policy including health insurance policy which is not in conformity with the proposal form submitted by the proposer.
  8. h) Non issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance and
  9. i) Any other matter resulting from the violation of provisions of the Insurance Act, 1938 or the regulations, circulars, guidelines or instructions issued by the IRDAI from time to time or the terms and conditions of the policy contract, in so far as they relate to issues mentioned at clauses (a) to (f).

Award:

  • If a settlement by recommendation does not work, the Ombudsman will:
  • Pass an award within 3 months of receiving all the requirements from the complainant and which will be binding on the insurance company

Once the Award is passed

  • The Insurer shall comply with the award within 30 days of the receipt of award and intimate the compliance of the same to the Ombudsman.

There is no appellate authority governing Ombudsman order. The order is final & binding.