Guide to Complaint Redressal System in the Insurance Sector in India

The insurance sector in India is a crucial financial pillar that offers protection and security to individuals and businesses. However, disputes and grievances between policyholders and insurers are common, often stemming from claim denials, delays, or unfair practices. To safeguard consumers, the Insurance Regulatory and Development Authority of India (IRDAI) has established a structured complaint redressal system, offering multiple avenues for resolving grievances. This article provides an in-depth look at the various stages of the complaint redressal system in the Indian insurance sector, supplemented by relevant case laws.

1. Internal Grievance Redressal by the Insurance Company

Policyholders are first required to approach the insurance company directly with their grievances. Insurers are mandated by the IRDAI to have a grievance redressal mechanism in place.

Procedure:

·?????? Submission of Complaint: A policyholder can submit a grievance either online through the insurer's website, via email, by phone, or by visiting the nearest branch.

·?????? Acknowledgment and Resolution: Insurers must acknowledge the complaint within 3 working days and attempt to resolve it within 15 days.

Relevant Case Law:

LIC of India vs. Consumer Education and Research Centre (1995) – In this landmark case, the Supreme Court of India held that insurance is a social security measure and insurers must act in good faith and respond to complaints swiftly to protect the interests of the insured.

2. Escalating the Complaint to IRDAI (Integrated Grievance Management System - IGMS)

If the insurer’s response is unsatisfactory, policyholders can escalate the matter to the IRDAI using the Integrated Grievance Management System (IGMS).

Procedure:

• Registration on IGMS: Policyholders can file their complaints online through the IGMS Portal. They must provide details such as the policy number, nature of the complaint, and supporting documents.
• Monitoring: The IRDAI forwards the complaint to the insurance company and tracks its progress. The company must resolve the issue within 15 days.

Relevant Case Law:

IRDAI vs. Shri Guru Raghavendra Sahakara Bank Niyamitha (2018) – The Karnataka High Court reiterated the duty of the IRDAI to ensure that insurers comply with the timeline of 15 days for resolving complaints. Non-compliance could lead to regulatory actions against the insurer.

3. Filing a Complaint with the Insurance Ombudsman

If the complaint remains unresolved or if the policyholder is not satisfied with the response from IRDAI or the insurer, they can approach the Insurance Ombudsman. This is an alternative dispute resolution mechanism for complaints involving amounts up to ?30 lakh.

Jurisdiction and Scope:

·?????? Complaints regarding unfair claim settlement, policy misrepresentation, and delays can be filed with the Ombudsman.

·?????? The Ombudsman’s decision is binding on the insurance company but optional for the policyholder.

·?????? Complaints must be filed within one year of the insurer’s rejection or unsatisfactory resolution of the complaint.

Procedure:

·?????? Online: Complaints can be lodged online via the Insurance Ombudsman Portal.

·?????? By Post: Policyholders can send written complaints directly to the Ombudsman’s office, which is located in 17 cities across India.

Relevant Case Law:

Amarendra Nath Verma vs. Life Insurance Corporation of India (2020) – In this case, the Ombudsman ruled in favor of the complainant, ordering the insurer to pay the policyholder the full amount of a delayed claim. The decision underscored the Ombudsman’s authority to adjudicate on matters of claim delays and underpayment by insurers.

4. Filing a Case in Consumer Courts (Consumer Dispute Redressal Commissions - CDRCs)

For cases where the Insurance Ombudsman’s decision is unsatisfactory, or if the amount in dispute exceeds ?30 lakh, policyholders can approach the Consumer Dispute Redressal Commissions (CDRCs).

Jurisdiction:

• District Commission: Claims up to ?50 lakh.
• State Commission: Claims between ?50 lakh and ?2 crore.
• National Commission: Claims above ?2 crore.

Procedure:

• Complaints can be filed through the E-Daakhil Portal, the online consumer grievance redressal system, or physically in the relevant consumer court.
• Consumer courts deal with cases where there is alleged deficiency in services by the insurer, including delayed or denied claims.

Relevant Case Law:

Oriental Insurance Co. Ltd. vs. Munimahesh Patel (2006) – The National Consumer Disputes Redressal Commission (NCDRC) ruled that insurance companies must not reject claims on frivolous grounds. The judgment held the insurer liable for compensation, setting a precedent for consumer rights in the insurance sector.

Harshad J. Shah & Anr. vs. LIC of India & Ors. (1997) – The Supreme Court emphasized that the terms of an insurance contract must be interpreted in favor of the policyholder, especially where there is ambiguity. The case strengthened the rights of policyholders in consumer courts.

5. Online Dispute Resolution (ODR) Initiatives

Several insurers and third-party platforms have started offering Online Dispute Resolution (ODR) for insurance grievances. ODR uses mediation, negotiation, and arbitration to resolve disputes digitally.

Key Features:

• Speed: ODR offers faster resolution compared to traditional courts.
• Convenience: Policyholders can resolve disputes without visiting physical offices.

Though ODR is still evolving in the Indian insurance sector, it has been successfully adopted in certain areas, reducing the burden on courts and regulators.

6. IRDAI’s Role and Regulations

The IRDAI plays a crucial role in the complaint redressal process by overseeing the grievance handling procedures of insurers and ensuring compliance with regulations like the Protection of Policyholders’ Interests Regulations, 2017.

IRDAI’s Enforcement:

• Penalties are imposed on insurers for failing to comply with grievance redressal timelines.
• IRDAI actively monitors complaints through IGMS and intervenes when necessary.

Relevant Case Law:

ICICI Lombard General Insurance Co. Ltd. vs. Consumer Education and Research Society (2011) – In this case, the IRDAI intervened and imposed fines on the insurer for not complying with the grievance redressal guidelines, showing its commitment to policyholder protection.

Types of Complaints Commonly Filed:

• Claim Rejection: Unjustified denial of insurance claims.
• Delay in Claim Settlement: Excessive delay in processing claims.
• Misrepresentation: Incorrect information provided at the time of policy issuance.
• Unfair Terms and Conditions: Disputes arising from unclear or unfair policy terms.

Conclusion

India’s insurance complaint redressal system provides policyholders with multiple avenues for resolving disputes, ensuring that their rights are protected. From internal mechanisms within insurance companies to consumer courts, the system aims to deliver swift and just outcomes. However, policyholders should be aware of the processes, timeframes, and legal precedents that can impact their claims. With increasing digital initiatives and regulatory oversight, the redressal system is evolving to offer more efficient and transparent services to consumers.

Key Takeaways:

1. Start by filing a complaint with the insurer.
2. If unresolved, escalate to IRDAI via IGMS or file a complaint with the Insurance Ombudsman.
3. For claims exceeding ?30 lakh or unresolved disputes, approach the Consumer Dispute Redressal Commissions.
4. Familiarize yourself with case laws that support consumer rights in the insurance sector.

Feel free to get in touch if you need any help in redressal of your insurance complaint

?Amarjeet Singh, Advocate

Founder, Justice Action Network Consultancy

Chamber No 536, Patiala House Court, New Delhi (India)

Email: [email protected]

LinkedIn: https://www.dhirubhai.net/in/amarjeetpanghal

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