Ombudsman Report Highlights Key Issues in Indian Insurance Sector
In the recently released Ombudsman Annual report for the year 2022-23, several critical observations and recommendations have been made regarding the quality of services rendered by insurers in India. The report sheds light on common grievances and issues faced by policyholders, emphasizing the need for reform and improvement within the insurance industry. Here are the key points raised by the Ombudsman:
Life Insurance Sector:
- A significant portion of complaints in the Life Insurance sector relates to mis-selling, particularly to vulnerable groups such as the less-educated, financially less savvy, and the elderly. This accounted for a staggering 58% of total complaints addressed during the year.
- Mis-selling with attractive but false promises by intermediaries is a prevalent issue and should be dealt with firmly.
- The report highlights the importance of effectively implementing the 15-day Free Look period and Pre-Purchase Verification Call in the Life Insurance sector.
- There is a need for a more responsible approach to ensure that proposed insured individuals fully understand the terms and conditions of the insurance policies offered to them.
- Information sharing about policy terms and conditions, especially in situations like banc assurances, concurrent purchase with loans, and group insurance policies, is crucial to reduce instances of mis-selling.
Non-Life Insurance Sector:
- In the General Insurance sector, major claims were reported primarily from Motor Insurance.
- The most significant number of complaints (83.52%) in this sector relate to partial and total repudiation of claims by insurers.
Health Insurance Sector:
- The report notes that a large number of cases in the Health Insurance sector pertained to Medi-claim, especially related to COVID-19 cases.
- The criticality of accurate health declarations, disclosure of past ailments, treatments, and claims, and the consequences of misrepresentation need to be communicated more strongly and categorically in sales literature and policy documents.
- Medical examination should be mandatory for cases above a certain age, especially when certain lifestyle conditions are not disclosed.
General Suggestions by COI:
- Insurers are encouraged to consider conciliation settlements wherever possible instead of contests.
- The report highlights the need for more personalized responses in Self Contained Notes (SCN) based on the content of complaints and references to judgments of different courts of law.
- Many insurers do not prominently mention the address of the Insurance Ombudsman in their policy documents.
- Timely flow of SCNs from respondent insurers can expedite complaint resolution.
- Policyholders should be educated not to provide inaccurate declarations in any form.
- Letters issued by insurers regarding repudiation, rejection, or closure should be comprehensive and in simple language.
- Insurers should send inward acknowledgment to customers with basic details, and systems should auto-generate inward numbers upon document upload.
- Sensitizing insurance customers through various media channels on the importance of correct declarations is crucial.
- The role of Grievance Redressal Officers within insurers is pivotal, and insurers should strengthen their internal complaint redressal mechanisms.
The Ombudsman report for 2022-23 underscores the need for the insurance industry in India to address these issues promptly and comprehensively to ensure fair and transparent services to policyholders.
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Link to the COI Report 2022-23: Click Here
