New Insurance Ombudsman Rules: Stronger Protection for Policyholders

The Central Government has proposed big changes to the Insurance Ombudsman Rules, 2017. One of the changes is to officially call the ombudsman the “insurance ombudsman” so the role is clearer.

The new rules are meant to protect people who buy insurance. They include stricter requirements for insurance companies. If an insurance company does not follow the rules or does something wrong, it may have to pay compensation of up to Rs 20 lakh to the policyholder.

The new changes will give more power to the insurance ombudsman (the official who handles customer complaints). Now, the ombudsman will be able to:

• Take action not just against insurance companies, but also against insurance brokers if they do something wrong.
• Look into more types of complaints, not just payment disputes. Customers can also complain about poor service or delays.
• Use a fully digital system where people can file complaints online, track their status, and even attend hearings through video calls.

Insurance ombudsman reforms

• Insurance brokers and government insurance schemes will now also come under the insurance ombudsman. This means customers can complain about them too.
• The entire complaint process must be done online.
• The online system will let people upload documents, track their complaint, and give consent for mediation.
• The ombudsman must acknowledge every complaint within one day, so customers know it has been received.
• The government has set up a new appeal authority, where people can appeal against the ombudsman’s decision within 30 days.
• This appeal authority must give its final decision within three months.
• Strong action can be taken against insurance companies if they don’t follow the new rules.

What are the Ombudsman Rules in Insurance?

Insurance companies may now have to pay up to Rs 20 lakh if they fail to follow the rules or cause loss to a customer. The new rules also allow customers to get compensation for mental harassment, up to Rs 1 lakh.

These amendments have been introduced to enhance the insurance complaint system so problems are solved faster, fairly, and without high costs when customers face poor service or mistakes from insurers.