The Council of Insurance Ombudsmen, in its Annual Report for FY 2023-24, has made several key observations to enhance the insurance grievance redressal process. The report underscores the importance of timely submission of Self-Contained Notes (SCN), senior-level representation during hearings, and the formulation of Standard Operating Procedures (SOPs). These measures aim to streamline processes and improve claim settlement experiences across the Life, General, and Health Insurance sectors.

Life Insurance: Addressing Misrepresentation and Mis-Selling

In the Life Insurance segment, 59% of complaints were lodged under Rule 13(1)(d), concerning misrepresentation of policy terms and conditions. The Ombudsman stressed the importance of implementing the Free Look Period of 15 days and conducting Verification Calls to combat mis-selling. The report recommends regular training for insurance agents to ensure they are knowledgeable about the products offered to policyholders.

Additionally, the Ombudsman emphasized the need for fair and transparent dealings in policies sold through alternate channels like bancassurance and group insurance. Insurers and intermediaries, such as banks, should prioritize policyholder education and ensure clear communication to prevent mis-selling, especially for life or accident covers bundled with loans.

Health Insurance: Ensuring Transparency and Clarity

In the Health Insurance sector, 95% of complaints fell under Rule 13(1)(b), relating to partial or total repudiation of claims. The Ombudsman reinforced the principle of Uberrima Fides (utmost good faith) and urged policyholders to accurately declare pre-existing conditions to avoid claim denials. A particular concern was the Reasonability & Customary Clause, which insurers often use to reject claims. The Ombudsman recommends better education for customers on these clauses.

The Ombudsman also advocated for uniform practices in settling cataract claims and urged insurers to update terms to reflect technological advancements, particularly procedures that do not require 24-hour hospitalization. Insurers were also called to clarify exclusions related to specialist fees during critical illness treatments to ensure transparency.

General Insurance: Improving Claim Resolution and Transparency

In General Insurance, 87% of complaints were related to claim repudiation. The Ombudsman stressed the need for insurers to resolve disputes through mediation. The timely submission of SCNs is crucial, with recommendations that they be provided within 7-10 days of complaint registration for swift resolution.

Furthermore, the Ombudsman advocated for senior-level representation during hearings, as such representation can add clarity to complex disputes. Adherence to SOPs for SCN preparation and settlement processes was also emphasized to streamline the claims process.

Recommendations for Improvement

In addition to sector-specific insights, the Ombudsman recommended training for officers at Insurance Ombudsman centers and the use of digital tools to flag fraudulent claims or hospitals involved in fraudulent activities. Better coordination among insurers was advised to prevent fraud, alongside thorough investigations through specialized agencies.

The FY 2023-24 observations reflect the Ombudsman's ongoing efforts to create a more efficient, transparent, and customer-centric insurance grievance redressal system. By addressing these challenges, the Insurance Ombudsman aims to foster a more trusting relationship between insurers and policyholders.

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Source: Annual Report for FY 2023-24, Council for Insurance Ombudsmen, pg. 76-77, available at www.cioins.co.in.