Rejected Insurance Claims? An In-House Ombudsman Could Help
Facing a rejected or delayed insurance claim can be frustrating and financially stressful. To address such issues more efficiently and provide policyholders with an independent, impartial, and faster grievance redressal system within insurance companies, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed new guidelines in 2025 for the appointment of an Internal Insurance Ombudsman.
What Is an Internal Insurance Ombudsman?
An internal ombudsman is a designated independent officer appointed by an insurer—except reinsurers—with over three years of operation, whose sole responsibility is to review and resolve unresolved or escalated insurance complaints involving claims up to ₹50 lakh. This ombudsman acts as an internal but neutral dispute resolution authority before matters escalate to external bodies or courts.
Key Features of the Internal Ombudsman System
Scope of Claims: Handles complaints related to claims up to ₹50 lakh, ensuring timely resolution of majority of the policyholder grievances.
Independence: The ombudsman must not be employed or have worked with the insurer or its group companies, ensuring impartiality.
Eligibility: Typically appointed from senior insurance professionals with at least 20 years of experience and high-level expertise.
Reporting Structure: Administrative reporting to the Managing Director or CEO, but functionally accountable to the Board or a dedicated Grievance Redressal Committee. This dual reporting ensures operational independence while maintaining governance oversight.
Time-Bound Resolution: Complaints unresolved by the insurer within 30 days or those involving partial or full rejection are eligible for the ombudsman’s review, aiming for quicker redressal.
Multiple Appointments: Larger insurers may appoint multiple ombudsmen with defined jurisdictions to enhance accessibility and speed.
Why Does This Matter to Policyholders?
Improved Trust and Transparency: Having a fair, impartial internal mechanism boosts confidence in insurers’ complaint handling capabilities.
Faster Grievance Redressal: Reduces dependence on the external Ombudsman offices or courts, cutting legal and procedural delays.
Additional Layer of Appeal: Offers policyholders a formal but internal appeal option before pursuing external remedies, simplifying dispute resolution.
Enhanced Accountability: Mandates insurers to be more responsive and accountable for claim decisions.
What Should Policyholders Do If Their Claim Is Rejected?
First, approach the insurer’s standard grievance redressal cell.
If unresolved after 30 days, escalate the matter to the internal insurance ombudsman appointed by the insurer.
The ombudsman’s decision is aimed to be fair and binding at the internal level, offering a quicker resolution pathway.
If dissatisfaction persists, approach the Insurance Ombudsman office established by the Government of India or pursue legal recourse as a final step.
Frequently Asked Questions
What is the role of an internal insurance ombudsman?
To provide an independent, impartial, and speedy review and resolution of insurance claim disputes within the insurer’s internal grievance mechanism.
Which claims can I approach the internal ombudsman for?
Complaints involving insurance claims up to ₹50 lakh that remain unresolved or rejected after the insurer’s initial review.
Is the internal ombudsman independent from the insurer?
Yes, the ombudsman must meet strict independence criteria, including no prior association with the insurer or its group companies where appointed.
How does the internal ombudsman improve the claims dispute process?
It offers policyholders a quicker, fairer internal appeal mechanism, reducing delays and the need for external legal action.
What if I am still unsatisfied after the internal ombudsman’s decision?
You can approach the external Insurance Ombudsman office or seek legal remedies subsequently.
Published on: July 27, 2025
Published by: Selvi
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