‘Insurance Ombudsman’ Rule Amendment: Can It ‘Ensure’ Policyholders’ Trust ?
Yesterday, the Government of India notified consumer-friendly amendments to the Insurance Ombudsman Rules, 2017, with a view to improve the working of the Insurance Ombudsman mechanism. This aims in facilitating resolution of policy holder complaints, regarding deficiencies in insurance services in an efficient manner.
The Ombudsman mechanism is administered by the Executive Council of Insurers, which has now been renamed as the “Council for Insurance Ombudsmen”.
Ombudsman concept
The Ombudsman is an independent office under the aegis of the regulatory institution. The concept of this office is to provide speedy and cost-effective resolution of customers' grievances. A customer can complain to Ombudsman ,only if the insurance companies have not provided satisfactory response to the consumers complaints. The ombudsman, by philosophy, is policyholder-oriented.
The earlier rules of the Ombudsman allowed only for disputes. With the latest amendment, the scope for escalation to ombudsmen will also cover the deficiencies in any service on the part of insurers / insurance-agents / brokers and other insurance-intermediaries. Also importantly in recognition of their causal-effect in the entire insurance distribution value chain, the insurance brokers have been brought within the ambit of the Ombudsman mechanism. This empowers the Ombudsmen to pass awards against insurance brokers as well, where dereliction of service is established.
With this amendment, the Policyholders will now be able to file complaints electronically to the Ombudsman. It also envisages setting up of a “complaints management system” to enable policyholders to track the status of their complaints online.
Thanks to COVID lockdown work-habits, the use of Video-conferencing has been proven across industries and most of the consumer segments. Taking a leaf from this, the amendment also allows for the Ombudsman may use video-conferencing for hearings.
Empty seats, expensive-injustice
In the past, there have been many instances where the position of Ombudsmen were vacant and complaints were not redressed on time. Delayed ombudsman process means increased consumer frustration and reduced confidence about the sector !
In this latest amendment, provision has been made that in case of any vacancy in the office of a particular Ombudsman, additional charge would be given to another Ombudsman, to continue with normal activities of that office. While this might help in short-term, it should become the responsibility of the necessary authority to ensure that there is no vacancy occurring in the first place, unless due to any unforeseen circumstances. After all, succession planning is a skill that needs to be brought to public life as well.
Selecting the Ombudsman
The latest amendment has initiated efforts in strengthening the independence and integrity of the Ombudsman selection process; while also building in safeguards to secure the independence and impartiality of the appointed persons, while serving as Ombudsmen.
The process also envisages that experienced experts (just one level short of having been a Board member) can be on-boarded as Ombudsman. However with restriction mentioned for the age-eligibility-criteria, it tends towards skipping the younger of the experienced personnel ! Hopefully the future amendments would do justice that age need not be a deterrent for maturity of individuals with right experience set.
Further, the selection committee will now include an individual with a track record of promoting consumer rights or advancing the cause of consumer protection in the insurance sector. This would add value to the entire process of being consumer-focused.
Hopefully this amendment would allow for the office to have equatable private sector participation too and not just be an extension of the public sector service. Importantly, with the current global mantra of ESG stewardship, we should be also seeing a well balanced diversity mix of experts coming to the table.
Time (lines) & Technology (collaboration)
It is expected that this ombudsman process would speed-up the grievance resolution, by bringing in rigid and fixed timelines within which final outcomes have to be decided. After all, faster and efficient the dispute resolution, the higher confidence that the policy holders will have about the insurance industry.
For most who approach the ombudsman, speed is of essence as their patience already has been tested already by the pending dispute with the insurance entity. And also because the amount in dispute is material enough for them.
In today’s Fourth Industrial Revolution era that we live in, and with the advent and zealous adoption of digital technologies by the Government in the public sphere, it is a corollary expectation that the regulator would soon adopt digital “Alternate Dispute Resolution” mechanisms. This could be built by empowering commercially available digital platforms that offer arbitration / mediation, to work in conjunction with the Ombudsman mechanism. This would further increase reach of the Ombudsman, save time, costs and process of the grievance redressal.
Need to popularise existence of the Ombudsman role
Policyholders in general, are not aware about the Ombudsman process. Despite insurance policies having details about it along with the complaint escalation process, it has not turned the needle yet.
It would be useful if the regulator ensures spreading of the awareness about the ombudsman mechanism. This could be in the form of sustained awareness campaign (more direct and simpler the message, the better impact) using conventional as well as digital media, to send messaging to the policy holders that the regulator shares their concerns. It would give further boost to the regulatory efforts to safeguard policy holders interests.
This amendment is one of the silent and yet powerful policy influence, to build consumer trust and confidence about the sector. It’s intent is transparent and fair to the consumers. It’s implementation would determine consumer’s opinion about the industry.
