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September 24, 2019
All Articles by: Mr. M. GOVINDARAJAN       View Profile
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The Central Government, in exercise of its powers under Section 114(1) of the Insurance Act, 1938, framed the rule called as ‘The Redressal of Public Grievances Rules, 1998’ (‘Rules’ for short) and notified the said Rules vide Notification No. GSR 670(E), dated 11.11.1998.  These rules shall apply to all the insurance companies operating in-

  • general insurance business; and
  •  life insurance business.

The Central Government may exempt an insurance company from the provisions of these rules, if it is satisfied that an insurance company has already grievance redressal machinery which fulfills the requirements of these rules.

The objects of these rules are to resolve all complaints relating to settlement of claim on the part of insurance companies in cost effective, efficient and impartial manner.

Insurance Council

The Insurance Council shall consist of-

  • Life Insurance Corporation of India;
  • General Insurance Corporation of India and its four subsidiaries; and
  • Other Insurance Companies

which will be permitted to do insurance business in India.

Governing body of Insurance Council

  • There shall be a Governing Council of the Insurance Council which shall consist of one representative from each of the Insurance companies.
  • The representatives of an insurance company shall ordinarily be Chairman or Managing Director or any one of the Directors of such company.
  • The Governing body shall formulate its own procedure for conducting its business including the election of the Chairman.


The Governing Council shall appoint one or more persons as Ombudsman for the purpose of redressal of grievances.  The Ombudsman may have experience in the insurance industry, civil service, administrative service etc., in addition to those drawing from judicial service.

The Ombudsman shall be appointed by the Governing Body from a panel prepared by the Committee consisting of-

  • Chairman of Insurance Regulatory Authority – Chairman;
  • Two representatives of the Insurance Council including one each from Life Insurance Business and from General Insurance Business respectively – Member;
  • One representative of the Central Government – Member.

The term of the Ombudsman is 3 years.  No person shall hold office of Ombudsman after he has attained the age of 65 years.

Removal from office

  • An Ombudsman may be removed from service for gross misconduct committed by him during his term of office.
  • The Government may appoint such person as it thinks fit to conduct inquiry in relation to misconduct of the Ombudsman.
  • All enquiries on misconduct will be sent to the Insurance Regulatory Authority which may take a decision as to the proposed action against the Ombudsman.
  • On recommendations of the Insurance Regulatory Authority of India if the Governing Body is of the opinion that the Ombudsman is guilty of misconduct it may terminate his services.

Jurisdiction of Ombudsman

The Office of the Ombudsman shall be located at such place as may be specified by the Insurance Council from time to time.  The Governing Body shall specify the territorial jurisdiction of each Ombudsman.  The Ombudsman may hold sitting at various places wihin his area of jurisdiction in order to expedite disposal of complaints.

Powers of Ombudsman

The Ombudsman may receive and consider-

  • complaints;
  • any partial or total repudiation of claims by an insurer;
  • any dispute in regard to premium paid or payable in terms of the policy;
  • any dispute on legal construction of the policies in so far as such disputes relate to claims;
  • delay in settlement of claims;
  • non issue of any insurance document to customers after receipt of premium.


The procedure for disposal of complaint under these rules is as follows-

  • Any person who has a grievance against an insurer, may himself or through his legal heirs make a complain in writing to the Ombudsman within whose jurisdiction the branch or office of the insurer complained against is located.
  • The complaint shall be in writing.
  • The complaint shall be signed by the complainant or through his legal heirs.
  • The complain shall clearly state-
  • the name and address of the complainant;
  • the name of the branch or office of the insurer against which the complaint is made;
  • the fact giving rise to the complaint supported by documents, if any, relied on by the complainant;
  • the nature and extent of loss caused to the complainant; and
  • the relief sought from the Ombudsman.
  • No complaint shall lie unless-
  • the complainants had before making a complaint to the Ombudsman made a written representation to the insurer named in the complaint and either the insurer had rejected the complaint or the complainant had not received any reply within a period of 1 month after the insurer concerned received his representation or the complainant is not satisfied with the reply given to him by the insurer;
  • the complaint is not made not later than 1 year after the insurer had rejected the representation or sent his final reply on the representation  of the complainant;
  • the complaint is not on the same subject matter, for which any proceedings before any court, or consumer forum or arbitrator is pending were so earlier.
  • The Ombudsman may, if he deems fit, adopt a procedure of its own.
  • The Ombudsman’s decision whether the complaint is fit and proper for being considered it or not shall be final.
  • The Ombudsman may ask he parties for necessary papers in support of their respective claims.
  • The Ombudsman may collect factual information available with the Insurance Companies, if he considers necessary.
  • The Ombudsman shall dispose of a complaint fairly and equitably.


The Ombudsman shall act as a counselor and mediator in matters which are within his terms of reference and, if requested to do so in writing by mutual agreement by the insured person and the insurance company. The procedure involved in mediation is as follows-

  • When a complaint is settled through mediation, the Ombudsman shall make recommendations which he thinks fair in the circumstances of the case.
  • The copies of the recommendations shall be sent to the complainant and the insurance company concerned.
  • Such recommendation shall be made not later than one month from the date of receipt of the complaint.
  • If the complainant accepts the recommendations of the Ombudsman, he will send a communication within 15 days of the date of receipt of the recommendation.
  • The complainant shall confirm his acceptance to Ombudsman and state clearly that the settlement reached is acceptable to him in totality, in terms of recommendations in full and final settlement of complaint.
  • The Ombudsman shall send to the insurance company a copy of the recommendation along with the acceptance letter received from the complainant.
  • The insurer shall thereupon comply with the terms of the recommendations immediately not later than 15 days of the receipt of such recommendation and he insurer shall inform the Ombudsman of its compliant.
  • When the mediation is not settled, the Ombudsman shall pass an award which he thinks fair in the facts and circumstances of the case.
  • The Ombudsman shall pass the award within a period of 3 months from the date of receipt of complaint.
  • The Ombudsman shall not award any compensation in excess of which is necessary to cover the loss suffered by the complainant as a direct consequence of the insured peril, or for an amount not exceeding ₹ 20 lakhs (including ex-gratia and other expenses) whichever is lower.
  • A copy of the award shall be sent to the complainant and the insurer.
  • The complainant shall furnish to the insurer within a period of 1 month from the date of receipt of the award, a letter of acceptance that the award is in full and final settlement of his claims.
  • The insurer shall comply with the award within 15 days of the receipt of the acceptance letter and it shall intimate the compliance to the Ombudsman.
  • If the complainant does not intimate the acceptance the award may not be implemented by the Insurance Company.

Review of the performance

The performance of the Ombudsman shall be reviewed by an Advisory Committee not exceeding 5 persons to assist the Insurance Regulatory Authority from time to time.  The Insurance Regulatory Authority shall decide the time, venue and quorum of such meeting.  The Authority, after discussing the matter with the Governing Body, may recommend to Government appropriate proposals for effecting improvements in the functioning of the Ombudsman.  In the light of the recommendations made by the Authority the Government may carry out such amendments to the rules as they may deem fit.


By: Mr. M. GOVINDARAJAN - September 24, 2019



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