Insurers did not follow 20% orders of ombudsman

MUMBAI: Justice for insurance claimants takes a long time coming ever after winning an award from the ombudsman. A response to an activist’s query under the Right to Information (RTI) Act has shown that one in five awards announced by the insurance ombudsmen was pending at the end of FY20.

The Insurance Regulatory and Development Authority of India (Irdai) has said that it has not taken any disciplinary action against any insurance company so far for not complying with the order of the ombudsman. The RTI query was filed by Jeetendra Ghadge, who took an interest in the matter after his own experience with the ombudsman. He managed to get his order implemented within two months with help from the ombudsman’s office, but was surprised to see how lightly insurers were treating the orders.

According to the response, 9,528 awards were issued by various ombudsmen across the country against insurance companies in the previous financial year. Of this, insurers had complied with 7,664 orders, but 1,864 were pending at the end of the year. Public sector insurers Oriental, New India and National Insurance had the highest number of pending orders at 480, 303 and 289, followed by Bharti Axa Life at 198 and Star Health at 142.

Irdai has said that it has not acted against any insurer so far for delay in implementation. According to Vinay Sah, ombudsman for Maharashtra excluding Mumbai, there are instances when insurance companies take more than a couple of months. His orders now incorporate a condition that the award is to be complied with within one month, failing which interest will be applicable at bank rate plus 2% from the date of original rejection of the claim until payment.

Insurers say a majority of the claims pertain to health insurance where there is a high scope for dispute. This is because insurers frequently reject claims on the grounds of a pre-existing condition or non-disclosures. In life insurance, Bharati Axa Life Insurance has the highest number of pending claims followed by Life Insurance Corporation.

The larger private companies are much more prompt in settling the Ombudsman’s order. ICICI Lombard, ICICI Prudential, Bajaj Allianz Life Insurance, and both Future Generali’s life and general insurance arms had zero orders pending at the end of the year.