9. Customer Protection

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CUSTOMER PROTECTION

BY

ANIL KUMAR SINHAPROFESSOR,KEJRIWAL INSTITUTE OF MANAGEMENT ANDDEVELOPMENT STUDIES, NAMKUM, RANCHI


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CUSTOMER PROTECTION

Like any other business organisation life

insurance company also aims to makeprofit.But profit should not be made at theexpense of customers interest which is

the prime responsibility of the Insurancecompany.To fulfill this objectives the industry hastaken various measures.


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Code of Conduct for insurer

In the process of sale, the insurer or itsagent or any other intermediary shall act

according to the code of conduct prescribedby

The authority

The LI Council

The recognized professional body orassociation of which insurance intermediaryis a member.


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Type of complaints

Some of the most common complaintsregistered against insurers are:

1. Claim related complaints

Repudiation of the claim;

Survival benefit not being paid;

Non-payment of annuities; Claim amount not correct ; and

Penal interest not being paid;


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Type of complaints

2. Policy servicing related complaints

Non-receipt of policy bond;

Cancellation of policy;

Error in policy schedule;

Issue of duplicate policy;

Alterations in policy; Nomination/assignment of policies;

Partial withdrawal-related;

Non-receipt of statement of account/bonus

NAV-related in case of ULIPs: and Free-look refund.


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Type of complaints

3. Policy lapsed related complaints

Revival of lapsed polices;

Non-payment of surrender value;

Correct surrender value not being paid;and

The consequence of non-payment ofinterest on loans in lapsed policy causingforeclosure of a policy;


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Type of complaints

4. Complaint against agents behavior.

Wrong information given by Agent

No service is provided

Misappropriation of Funds

Illegal gratification, Hostile behavior


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Measures available for customersprotection

Regulations issued by IRDA

Insurers internal grievance redressersystem.

The Insurance ombudsman.

The role of the consumer Affairs

Department of the IRDA.The IRDA Grievance Redress cell.

Integrated Grievance Management

System.


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Regulations issued by IRDA

1. Issue of prospectus

2. Providing material information

3. Insurance agent should suggested policyto prospective customer as per theirneed.

4. Explain forms and documents to thecustomer.


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Insurers internal grievanceredressal system

The internal grievanceredressal mechanism to

be followed by everyinsurer.


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Insurance Ombudsman Scheme

The institution of Insurance Ombudsmanwas created by the Government of India

notification dated 11 Nov 1998.The purpose was to resolve Insuredcustomers grievances quickly and tomitigate the problems involved inredressing these grievances.

This institution is of grate importance andrelevance for protecting policy holdersinterests and also in building confidence inthe system.


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Appointment of InsuranceOmbudsman

The governing body of insurancecouncil issues orders for appointment

of the insurance Ombudsman on therecommendations of the committeecomprising of Chairman of Insurance

Council, Chairman of IRDA, Chairmanof LIC, Chairman of GIC and arepresentative of the Central

Government.


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Eligibility and Terms of office

Ombudsman are drawn from InsuranceIndustry, Civil Services and Judicial

Services.

An insurance Ombudsman is appointed for

a term of three years or till the incumbentattains the age of sixty five years,whichever is earlier. Re-appointment isnot permitted


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Territorial jurisdiction ofOmbudsman

The governing body has set up twelveombudsmen offices across the country.

Each ombudsman office has been allotteda different geographical area as their areaof jurisdiction and they may hold sittingsat various places within their area of

jurisdiction in order to expedite thedisposal of complaints.


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List of Office of InsuranceOmbudsman

(1) Bhopal, (2) Bhubaneswar, (3) Cochin,(4) Guwahati, (5) Chandigarh, (6) New

Delhi, (7) Chennai, (8) Kolkata, (9)Ahmedabad, (10) Lucknow, (11) Mumbai,(12) Hyderabad.

The Ombudsman may hold sitting atvarious places within their area of

jurisdiction in order to expedite disposalof complaints.


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Functions of Ombudsman

The Insurance Ombudsman has two typesof function to perform

Conciliation: and Making awards.


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The Insurance Ombudsman is empoweredto receive and consider complaints inrespect of personal lines of insurance from

any person who has a grievance againstan insurer. The nature of the complaintmay relate to any grievance against theinsurer. Examples include:


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Any partial or total repudiation of claims by theinsurance companies;

Any dispute with regard to premium paid or

payable in terms of the pay Any dispute on the legal construction of the policy

wording in the case that such a dispute relates toclaims;

A delay in settlement of claims; and Non-issue of any insurance document to customers

after receipt of premium;Insurance companies are required to honor theawards passed by the Insurance Ombudsman(which must be made within three months) within15 days.


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Manner of lodging complaint

Before lodging a complaint: The complainant should have made a

representation to the insurer named in thecomplaint and the insurer has either rejectedthe complaint, failed to respond within a periodof one month, or the customer is dissatisfiedwith the insurersresponse; and

The same subject of complaint should not bepending before any court, consumer forum orarbitrator.The complaint must be made within one year

of theinsurers

response.


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Complaint resolution Process

1. Withdrawal / Settlement

It is the duty of the Ombudsman to promotea settlement by agreement between thecomplainant and the insurance companythrough mediation or conciliation. To achievethis, the Ombudsman may follow such

procedures as it considers appropriate. Ifthere is an agreement between the twoparties and the issue is settled, the twoparties may go ahead with it and the casemay be withdrawn


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Complaint resolution Process

2. Recommendation

If there is no agreement or settlementbetween the two parties within what theOmbudsman feels to be an appropriate

timeframe, then the Ombudsman maymake a recommendation to what is, inhis opinion, fair to both the parties.


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Such a recommendation shall be made no laterthan one month following receipt from the

complainant and copies will be sent to thecomplainant and the insurance companyconcerned.

The recommendation is binding on the complainantif they accept all terms of the recommendation in

full and final settlement of the complaint.If the complainant accepts the recommendationthey will send a communication in writing within 15day of the date of receipt acknowledging theiracceptance.

If the recommendation is accepted by thecomplainant, then it will be binding on the insurerand it will have to fulfill its obligation.


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3. Award

If there is no agreement or settlement

and the recommendation is also notacceptable to the complainant, then inthis case the Ombudsman will grant anaward.

This award is binding upon the insurancecompany.

If the policyholders is not satisfied withthe award of the Ombudsman they canapproach other venues such asConsumer Forums and Courts of law forredressal of their grievances.


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Non acceptable / Non Maintainablecomplaint

Complaints received which the Ombudsmanfeels are without sufficient cause or wherethere is no loss or damage or inconvenience

suffered by the complainant, it may beclassified as non-acceptable or non-maintainable complaint.

Such complaint can be dismissed by theOmbudsman as non acceptable or non

maintainable.

The Ombudsmans powers are restricted toinsurance contracts of value not exceeding Rs.20 Lakhs.


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Other reasons for dismissal ofcomplaint

Complaints can be dismissed by theOmbudsman in the following cases also:

If the complainant approaches theOmbudsman directly without firstapproaching the insurer and giving theinsurer an opportunity to resolve theirgrievance.

If the same complaint on the subject ispending before any court, consumer

forum or arbitrator.


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Conclusion

The steady increase in the numberof complaints received by variousombudsman offices shows that thepolicyholders are placing their

confidence in the Institution ofInsurance Ombudsman.


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9. Customer Protection

Documents

Transcript of 9. Customer Protection