When and how to complain Insurance Ombudsman for quick resolution on claim rejection

When Rohit received a staggering medical bill of ₹32 lakhs for his wife’s treatment, he relied on his health insurance policy to cover the cost. However, despite the valid claim, his health insurance provider rejected it, leaving him burdened with the entire amount. Multiple attempts to resolve the issue with the insurer were futile, pushing him to file a case in consumer court. Unfortunately, as the claim amount exceeded the ₹30 lakh limit, he was not eligible to approach the Insurance Ombudsman, a specialized institution dedicated to handling such insurance disputes. It has been two years since Rohit filed his case, and he’s still awaiting a resolution, illustrating the struggles faced by many policyholders with high claim amounts.

Rohit case underscores the challenges faced by policyholders when their claims exceed the threshold previously set by the Insurance Ombudsman. Recognizing the need for a change, the government has recently raised the claim settlement limit for the Insurance Ombudsman from ₹30 lakhs to ₹50 lakhs. This adjustment, implemented by the Insurance Council, allows a broader segment of policyholders to seek quick, cost-effective redressal through the Ombudsman, avoiding the time and expense of court proceedings.

This article explores the significance of this new limit, the reasons it was necessary, and how it benefits policyholders. We also provide a comprehensive guide on how to file a complaint with the Insurance Ombudsman and what to expect during the process.

Also see: Best Health Insurance Plans with BP and Diabetes cover for Day One

The Importance of the Insurance Ombudsman and Recent Changes to Claim Limits

The Insurance Ombudsman is a pivotal body in the Indian insurance landscape, designed to mediate and resolve disputes between insurance companies and policyholders. Established to offer a fair, efficient, and transparent grievance redressal mechanism, the Ombudsman’s purpose is to relieve policyholders from the costs and delays typically associated with legal proceedings. Previously, the claim settlement limit for the Insurance Ombudsman was set at ₹30 lakhs, restricting its jurisdiction to relatively smaller claims.

However, with the recent revision, the limit has been raised to ₹50 lakhs. This change allows the Insurance Ombudsman to address a broader range of claims, accommodating the increasing costs of medical treatments and rising insurance premiums. There are 17 Insurance Ombudsman offices across India, and they now serve as a more accessible and effective means of settling high-value claims without the need to involve consumer courts.

Why Was an Increase in the Claim Limit Necessary?

According to Shailesh Kumar, co-founder of Insurance Samadhan, the previous limit of ₹30 lakhs for the Insurance Ombudsman was established nearly two decades ago. At that time, this amount covered most claims, as insurance premiums and healthcare costs were significantly lower. Since then, both insurance cover and premiums have increased, leading to higher claim amounts. Policyholders with legitimate claims often found that their cases exceeded the ₹30 lakh threshold, forcing them to approach consumer courts for resolution.

The challenges of taking cases to consumer court are numerous. Consumer courts are often backlogged, and resolving a case can take years. This delay is costly and inconvenient for policyholders, as legal fees and court costs can add up quickly. Additionally, the lengthy process also burdens insurance companies, which have to commit resources and legal counsel for extended periods.

Thus, increasing the claim limit for the Insurance Ombudsman was a necessary step to ensure that policyholders are not forced into lengthy and expensive legal battles for high-value claims. By raising the limit to ₹50 lakhs, the government aims to reduce consumer grievances, make the claim process more efficient, and lessen the pressure on consumer courts.

Also see: Why Corporate Group health Insurance in not enough

How the New Limit Benefits Policyholders

The increase in the claim limit to ₹50 lakhs presents several key advantages for policyholders:

1. Faster Resolution of Claims: The Insurance Ombudsman is required to resolve complaints within 90 days, which is significantly faster than the time it typically takes for a case to conclude in consumer court. This expedited process is advantageous for policyholders who need their claims settled quickly, especially in cases involving urgent medical expenses or financial hardship.
2. Cost Savings: Legal proceedings can be costly, especially for high-stakes cases. By keeping these cases within the jurisdiction of the Insurance Ombudsman, policyholders can save significantly on legal fees and court costs. The Ombudsman process is free of charge, making it an accessible option for policyholders of all backgrounds.
3. Binding Nature of Ombudsman Decisions: One of the most impactful features of the Ombudsman’s rulings is that insurance companies must comply with them within 30 days. If they fail to implement the decision, the insurance company may be required to pay interest on the claim amount. This provision ensures that policyholders receive timely payments and reinforces the authority of the Ombudsman.
4. Limited Legal Challenges by Insurers: The Ombudsman’s decision is binding for the insurance company, and they are not allowed to challenge it in court. This rule provides a level of security for policyholders, who may otherwise face prolonged litigation if their insurer decides to contest the claim in a higher court. However, policyholders who are dissatisfied with the Ombudsman’s decision still have the option to appeal in consumer court, ensuring that their rights are protected.

Process for Filing Complaints with the Insurance Ombudsman

Policyholders can now follow a streamlined process to file complaints with the Insurance Ombudsman if they encounter issues with their insurance providers. Below is a detailed step-by-step guide:

1. Submit a Written Complaint to the Insurance Company

Before approaching the Ombudsman, policyholders must first submit a written complaint to their insurance company. This is a crucial initial step, as it gives the insurer an opportunity to address the issue directly. If the company does not respond within 15 days, the policyholder should follow up with another written complaint.

2. Wait for 30 Days Before Approaching the Ombudsman

If the insurer fails to respond satisfactorily after 15 days, the policyholder must wait an additional 15 days, totaling 30 days from the date of the initial complaint. After this period, the policyholder becomes eligible to file a complaint with the Insurance Ombudsman.

3. Submit Documentation to the Ombudsman

Once eligible, the policyholder can file a complaint with the Insurance Ombudsman by submitting a signed complaint letter along with essential documents, including:

• A copy of the insurance policy
• The rejection letter from the insurer
• Identification proof (such as Aadhar or Voter ID)

4. Choose Between Online and Offline Filing Options

The Bima Ombudsman website (www.cioins.co.in) enables online complaint filing, a convenient option for those who cannot visit an Ombudsman office in person. This digital access allows policyholders to submit complaints and participate in hearings online.

5. Participate in the Hearing Process

After submitting the complaint, the Ombudsman will schedule a hearing date. Policyholders can attend the hearing in person or online, depending on their preference.

6. Resolution Timeline

As per rules, the Ombudsman must resolve the complaint within 90 days, and insurance companies are required to implement the decision within 30 days.

Ensuring Smooth Processing and Timely Resolution

To enhance the efficiency of the Ombudsman process, policyholders are advised to keep detailed records of all correspondence, including emails, documents, and communications with the insurance company. These records provide essential evidence if the complaint escalates to the Ombudsman. The 90-day timeline and the mandatory 30-day compliance rule help in ensuring that policyholders receive timely resolutions and financial support.

When Not to Use the Insurance Ombudsman.

While the Ombudsman offers a robust solution for resolving insurance disputes, there are certain cases where it may not be applicable:

• Cases Involving Fraud: The Ombudsman does not handle cases involving fraud or criminal misconduct. Policyholders should approach law enforcement or specialized legal channels for such issues.
• Claims Beyond the One-Year Window: Complaints must be submitted within one year of the claim being rejected by the insurance company.
• Claims Over ₹50 Lakhs: For claims exceeding the ₹50 lakh limit, policyholders will still need to go to consumer court.

Conclusion

The increase in the claim settlement limit for the Insurance Ombudsman represents a positive development for policyholders across India. By expanding the Ombudsman’s jurisdiction, the government has opened up an efficient, cost-effective avenue for claim settlement, sparing policyholders from the prolonged and expensive process of consumer court litigation. For individuals like Rohit, the new rules mean quicker access to justice and a greater likelihood of securing fair treatment from insurers.

The Insurance Ombudsman system embodies a commitment to protecting consumer rights, ensuring that policyholders have access to a free and fair dispute resolution mechanism. By addressing the needs of policyholders, the Ombudsman fosters a more transparent and trustworthy insurance sector, benefiting both policyholders and insurance providers.

For any policyholder facing a rejected or unfairly handled claim, the Insurance Ombudsman offers a lifeline. Armed with thorough documentation and persistence, individuals can navigate the Ombudsman system with confidence, assured that their rights and interests are being safeguarded.

FAQs

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as legal or financial advice. Readers are encouraged to consult with a qualified insurance advisor or legal professional for specific guidance related to their individual circumstances. The author and publisher are not responsible for any actions taken based on the content of this article.