Policyholder protection framework structure needs a revamp: Report
The insurance grievance redressal structure could do with an authority with more powers, says an industry report
The interests of the Indian insurance industry and policyholders will be better served if a penultimate insurance authority that is more powerful than the Insurance Ombudsman is formed, a research report prepared by independent insurance industry veterans H Ansari, former IRDAI member (non-life) and Arun Agarwal, ex-Lloyds of London senior executive, has said. The India Office of City of London supported the study that aims to lay out an agenda for the Indian insurance industry and its policy framework.
One such recommendation calls for setting up of a penultimate insurance appellate authority whose decision is binding on both parties – the insurer as well as the insured. At present, the Insurance Ombudsman’s verdict is binding on the insurer, but not the policyholder, who may choose to approach the consumer forums if they are dissatisfied with the decision.
Burzin Somandy, advocate and solicitor, Somandy & Associates Advocates, who is associated with the report, also made a case for removing the cap of Rs 30 lakh on disputes related to personal lines handled by the Insurance Ombudsman.
“The global standards on policyholder’s protection fulcrum on contract certainty (pre-sale) and effective dispute resolution (post sales servicing) as the most effective way to service policyholders rather than embed them in every single regulation as mere ideals,” the report suggested. The authors also stressed on the need for terms and conditions that are “easy to read and understand,” while pointing out that policy wordings in Indian insurance contracts continue to be complex and archaic.