Nagesh Kini, who was auditor of general insurance companies, believes that the Insurance Ombudsman is a great option due to low cost, simple procedures and speedy redressal, even though it may take longer than mandated

Nagesh Kini has been an auditor of general insurance companies and General Insurance Corp. He is now an activist on consumer, finance, civic and environment issues. He believes that the Insurance Ombudsman is a great option due to low cost, simple procedures and speedy redressal, even though it may take longer than mandated. Excerpts:

Moneylife (ML): We have an Ombudsman office that forms a part of the Alternative Dispute redressal (ADR) mechanism for the insurance sector, but what are the pre-requisites before approaching the Ombudsman?

Nagesh Kini (NK): All insurance companies have an in-house redressal mechanism to resolve disputes. This should ideally be the first step to resolve the issues. It is advisable to file an application first to the insurance company’s grievance cell. Though this is not a hard and fast rule. When the Ombudsman is approached directly before approaching the in-house grievance cell of the company, it may ask the policyholder to address the matter first to the redressal cell of the insurer. Other pre-requisite is that the policyholder needs to file a declaration with the Ombudsman stating that he had not filed or would withdraw any application filed before other forum or court.

ML: In what ways the Ombudsman’s office is beneficial to a policy holder? What would encourage one to approach the Ombudsman?

NK: There are several benefits to approach the Ombudsman such as…
a. There is a speedy redressal.
b. It is cost efficient, because there is no need to appoint a lawyer, no court fees etc.
c. It is less adversial because the procedure is very simple. A simple application is to be filled up which is sent to the insurer for its response. On receipt the Ombudsman can call both for a personal hearing before delivering his verdict.

ML: Is the Rs20 Lakh pecuniary jurisdiction of the Ombudsman sufficient in the present time?

NK: Keeping the inflation in mind, the pecuniary jurisdiction of the Ombudsman needs to be enhanced. Mediclaim policies that fall under the ‘personal claims’ may often exceed Rs20 lakh. Medical expenses in the operations like Cardiac and cancer have gone up substantially.

ML: Can a group insurance policy holder approach the Ombudsman’s office?

NK: Yes, though the group insurance is discounted premium as a group of people or employees are covered under the same policy, claims can be filed by an individual.

ML: Well… on paper an Ombudsman has to clear a matter/case within 90 days from the date of filing, does it reflect in practice?

NK: It seldom happens because of operational constraints like manpower, money, budget and stationery. It is not always possible for the Ombudsman to deliver his verdict within 90 days. Generally it takes more time to clear an application. In many cases, it can take six to nine months. Also there may be procedural delay like when either of the parties do not appear at hearing or delayed response from insurers or when relevant documents are not filed.
 
ML: Ombudsman’s jurisdiction is also limited to claims related to ‘personal lines’ aspect. But where would a policy holder go who has taken fire insurance for his business.
 
NK: A dividing line needs to be cleared upon this point. This is because take for e.g. a car, which is in the name of the company, but is used for personal purpose by the company official. Where would he go to claim the insurance, the Ombudsman or the Civil Court, assuming that the claim is within the pecuniary jurisdiction of the Ombudsman?

ML: What is the scope for appealing on the Ombudsman’s order?

NK: The Ombudsman’s order is binding on the insurer. The verdict is not binding on the policy holder, who can appeal the order in the Civil or the Consumer Court.

ML: Is the Ombudsman better than Consumer forum or Civil Court?

NK: Yes.  Appealing to the Consumer forum or Civil Court defeats the purpose of the Ombudsman because the Ombudsman was established to save on time and cost. By going back to the Consumer forum and Civil Courts the policy holder will have to repeat all the legal formalities, like appointing lawyers.
 
ML: How can the appeal aspect of the Ombudsman order be made efficient than what we have discussed above?

NK: I think there should be a separate, higher mechanism at state or at the central level as an appellate body. This would obviate the need of going back to the Consumer forum or the Civil Courts.

ML: Should the pending Insurance cases in the Civil and Consumer Courts be transferred to a ‘New Insurance Judicial’ body in order to streamline the insurance cases?

NK: No. Rather the cases should be transferred to the Ombudsman because setting up a new body in the government is a big hassle. By doing so, the urge to improve the existing ombudsman office would be realized. What is advisable is to make the existing mechanism more efficient than to set up newer bodies.

ML: What would be your overall suggestions to make the present ADR mechanism of the insurance sector more efficient?

NK: Increase the pecuniary jurisdiction of the Ombudsman to at least Rs50 lakh. Improve operational constraints like manpower, office space, infrastructure and computers. On the appeal aspect, the civil and the consumer courts should be replaced by Insurance Appellate Tribunal.