REDRESSAL OF PUBLIC GRIEVANCES RULES, 1998
The Governing Body of Insurance Council (GBIC) has been established under Redressal of Public
Grievances Rules 1998, to set-up and facilitate the Institution of Insurance Ombudsman in India. The
Governing Body of, Insurance Council consists of one representative each from all insurance
companies; the representative is required to be either the Chairman or Managing Director or a
Director of the company represented.
The Redressal of Public Grievances Rules 1998 (RPG Rules·- 1998) contain provisions in respect of
appointment and office term, etc for Insurance Ombudsman and also include stipulations in respect of
staffing and administration of Ombudsman Centre, powers of Ombudsman, manner of lodging
complaint and disposal of complaint by Ombudsman either by way of Recommendation or Award.
Miscellaneous Provisions of the notification relate to constitution of Advisory Committee, submission
of annual report, etc.
Insurance Ombudsmen are appointed by the Governing Body and are empowered to entertain
complaints on the following aspects in respect of personal line insurances:
       Any partial or total repudiation of claims by an insurer.
       Any dispute in regard to premium paid or payable in terms of the policy.
       Any dispute on the legal construction of the policies in so far as such disputes relate to
       Delay in settlement of claims.
       Non-issue of any insurance document to customers after receipt of premium.
Highlights of Institution of Insurance Ombudsman
       12 Ombudsman Centres, covering the country, established in Ah.rnedabad, Bhopal,
        Bhubaneshwar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Kochi, Kolkata,
        Lucknow and Mumbai.
       Centres became fully operational during the financial year 1999 - 2000.
       In the last seven years i.e. 1.4.2000 to 31.3.2007, the institution has dealt with 49595
        complaints and has given relief of Rs. 53.01 crores to aggrieved claimants.
       Procedure is quick and free of cost.
       Apart from regular hearings at the Centres, Insurance Ombudsmen hold outstation
        hearings within their territorial jurisdiction for the convenience of complainants.
With a current complaint disposal rate of 84% as on 31.03.2007, the institution has given a good
account of itself as an Alternative Grievance Redressal Machinery in Insurance Sector.
Basically an insurance company is itself responsible to redress the grievances of customers. For this
purpose they have to maintain an in-house Grievance Cell. This cell Has to make sure that at each
level a grievance is registered and handled diligently to provide the customer with immediate
redressal. However in case of delay in such an action or inadequacy of relief, the customer is left
unsatisfied. It is the responsibility of the regulating authority to look into the welfare aspects of the
customer. To achieve the above said objective it should arrange to make the organization accountable
for its lapses and formulate the machinery and policy to measure the lapses and award penalty for the
same. The Ombudsman is such a machinery to help the customer and some times both the parties in
the interest of the insurance industry. This process shall continue while the policy continues. The
insurance company is responsible to provide prompt service to the customer. Any delay and
deficiency in service shall be the grounds for awarding the penalties. A person shall claim for the
losses suffered by him because of inefficient service. Thus he shall have a grievance and expect it to
be settled. If not settled, he will search for an intermediary for help.

 The Ombudsman is appointed on the concept of arbitration, which is a form of alternative dispute
 resolution. It is a mediating agency to settle the disputes and grievances of the customer and direct
 the insurance company to perform its part of duties. Otherwise, it may recommend adverse actions.
 This process would reduce the litigations and result in a speedy disposal of the issues cropping up
 between the insurance company and the policyholder or the insured. Sometimes it may take
 proactive role on the issues and some times it may act as per the bilateral agreements of the insurer
 and insured to settle the issues between them. Thus the ombudsman is a mediator, councellor and
 arbitrator for the matters stated in the rules.
 The Central Government, under the powers of the Insurance Act, 1938 made Redressal of Public
 Grievances Rules, 1998 by a notification published in the official gazette. The Ombudsman is
 established to check the functioning of the insurance sector machinery and settle the grievances of
 the consumers of the insurance business. The objective behind 'Redressal of Public Grievances
 Rules, 1998' was to resolve all complaints relating to settlement of claim on the part of insurance
 companies in cost-effective, efficient and impartial manner.
Constitution of Ombudsman
An Ombudsman is defined as an office established by the government to investigate and report on
complaints made by citizens against public authorities. In the context of insurance business an
Ombudsman will take up matter relating to insurance companies- private or public that undertake
insurance as their prime business. All grievances, relating to general and life insurance business as
complained by the policyholders would be the subject matter of the ombudsman.
Rule 5 defines the role and constitution of the Governing Body of the Insurance Council. The
Governing body of Insurance Council contains one representative from each of the insurance
companies of that particular area. The members of the Governing body elect a Chairman. The
Chairman of the LIC of India shall be the first Chairman. Under rule 6, powers are given to the
Governing Body to appoint the Ombudsman. Thus, the Governing Body of Insurance Council
appoints the Ombudsman. The Ombudsman is appointed from a panel of experts nominated for that
purpose by a committee. The Committee consists of Chairman of the Regulatory Authority, two
representatives of Life Insurance and General Insurance Business and one representative from the
Central Government.
Qualifications of Ombudsman
       He should be of the rank of a high court judge, and/ or
       He should have rich experience in the industry, civil service, administrative service,
       He should not be more than 65 years of age.
The Term, Remuneration and Jurisdiction
The term of office for an Ombudsman is 3 years, after which he is eligible for reappointment (Rule
7). An Ombudsman can be removed from office for gross misconduct. The Governing Body will
enquire or appoint such person as it thinks fit for the purpose to enquire into the misconduct of the
ombudsman. The Governing body after receiving the enquiry report and being satisfied about the
report submits the same to the Insurance Regulatory Authority, which decides on the proposed action
against the Ombudsman.
The Remuneration paid to an Ombudsman is at par with the remuneration payable to a High Court
judge. In addition to the above salary, the other allowances and perquisites specified by the
Government of India from time to time are allowed. These expenses arc paid from a fund established
for the administration of the Ombudsman office.
Staff and Financial Matters
The Insurance Council can appoint a secretarial staff in consultation with the ombudsman. All
expenses pertaining to the salary, allowances and perquisites of the Ombudsman and secretarial staff

are to be borne by the Insurance Council. The Ombudsman shall prepare a budget every year
indicating the required funds, and send it to the Governing Body. The Governing Body in consultation
with the Ombudsman will release the required funds.
The entire expenses of the Ombudsman, staff and the Insurance Council will be borne by the Life and
General insurance companies in equal proportion, till a decision is made by the Governing Body to
change it. The share of expenses incurred by each insurance company shall be in the ratio of premium
income earned in the previous year of such company.
"Premium Income" for the purpose of contribution to the pool of expenses for the Ombudsman means
the gross income without taking into account income from reinsurance.
Powers of Ombudsman
    The Ombudsman may consider or/and receive:-
         Complaints of grievances of the insured in relation to the policy purchased and claims made
          by them.
         Partial or total repudiation of claims by the insurer.
         Dispute with regard to premium paid or payable.
         Dispute on legal construction of policies in so far as such dispute relates to claims.
         Delay in settlement of claims.
         The Ombudsman by the mutual agreement of the insured and the insurer can act as a
          mediator and counselor within the terms of reference.
         The decision of the Ombudsman whether to accept or reject the complaint is final.
Any person suffering a grievance can complain. The complaint may relate to the rejection of the
claim, delay in finalizing it, rejection of any request made to the insurance company, which is a part
of insurance business and policy. The complaint can be made either by the policyholder himself or
any other person having the interest in the subject matter. The complaint can also made for the
disputes/ grievances relating to the premium charged or payment, partial repudiation of the claim,
legal construction of the policy and conditions of the policy. The complaint can be also made if the
insurance company fails to reply for the representation made by the insurance policy holder with in a
period of one month.
Any complaint made to the Ombudsman should be
         In writing,
         Signed by the insured or his legal heirs,
         Addressed to an Ombudsman within whose jurisdiction the insurer has a branch office,
         About complaints and settlements,
         Supported by documents, if any, along with an estimate of the nature and extent of loss to
          the complainant and the relief sought.
Procedure for Filing Complaints
Prior to approaching the Ombudsman, the insured is required to make a representation to
insurance company regarding his grievance. The insurance company has a month’s time to
reply to the same. If the representation is rejected either totally or partially, or if no reply is
received within a month, the insured can approach the Ombudsman.
A complaint to the Ombudsman is to be filed within one year from the date of final rejection
of the claim. Supporting documents must be annexed to the complaint.

On receipt of the complaint, it is scrutinised. If it is in order, a proforma is sent and the
complainant is required to submit his complaint as per the proforma. The Ombudsman has
the authority to collect all factual information that he may deem necessary for deciding the
dispute. There is no formal procedure to be followed. The only requirement is that the dispute
should be disposed of in a fair and equitable manner.
The complainant and his representative and the insurance company’s officials are afforded an
opportunity to be heard. This is termed as a “deposition” and a summary of the same is
transcribed and typed out.
Later the Ombudsman considers the rival contentions and makes an Award which...
The Ombudsman will not act on a complaint regarding which
         The insurer has not been notified earlier by the insured,
         The representation made by the insured to the insurer is less than a month old,
Any proceedings in a court of law or consumer forum or with an arbitrator is pending.
The Ombudsman's Recommendations
        The Ombudsman should recommend when both the parties agree on his mediation,
        The copies of recommendations should be sent to both the complainant and the insurance
        Recommendations should be made not later than one month of the receipt of such a
        Recommendations have to be accepted in writing by the complainant within 15 days of
         receipt of such recommendation,
        A copy of acceptance letter by the insured should be sent to the insurer and his written
         confirmation should be sought within 15 days of his receiving such acceptance letter.
The Rules Governing the Awards are
        If the dispute is not settled by intermediation the Ombudsman will pass an award to the
         insured which he thinks is fair,
        The award passed should not be more than what is necessary to cover the loss of the insured,
        The award should not be more than Rs.20 lakh (inclusive of ex-gratia· payment and other
        The award should be made within a period of 3 months from the date of receipt of such a
        The insured should acknowledge the receipt of the award in full as a final settlement within
         one month of the receipt of such reward,
        The insurer shall comply with the award and send a written intimation to the Ombudsman
         within 15 days of the receipt of such acceptance letter,
        If the insured does not intimate in writing the acceptance of such award, the insurer may not
         implement the award,
        The Ombudsman has to act fairly and equitably without any interest in the subject matter
         and should prepare a report of his activities every year and report the same to the Central



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