Irdai proposes internal ombudsman to address claims up to ₹50 lakh

Business Standard

7 days ago

The Insurance Regulatory and Development Authority of India (Irdai) on Wednesday proposed the establishment of an internal insurance ombudsman for insurance companies (except reinsurers) with over three years of operations, to address unresolved complaints. The ombudsman will have the authority to hear complaints for claims up to Rs 50 lakh.
The insurance regulator said it has proposed to issue the IRDAI (Internal Insurance Ombudsman) Guidelines 2025 to facilitate effective and speedy grievance resolution and to further improve complaint management standards.
In its press release, Irdai said: 'The draft guidelines propose the establishment of an independent and impartial review mechanism within insurers to address unresolved or escalated complaints in a fair, transparent, and time-bound manner. Applicable to all insurers (except reinsurers) with more than three years of operations, the framework mandates the appointment of an internal insurance ombudsman to address complaints involving claims up to Rs 50 lakh.'
'Insurers may also appoint more than one internal insurance ombudsman, with well-defined jurisdiction, to ensure effective coverage and responsiveness,' Irdai added.
According to the draft, a person shall be qualified for the appointment of internal insurance ombudsman only if they have served for at least 20 years in the insurance industry and held a post not less than two levels below that of a board director. The person must not be currently working with, or have previously worked with, the insurer or companies in the group to which the insurer belongs.
The appointment shall be for a fixed term of three years or until the age of 70, whichever is earlier. The minimum age at the time of appointment shall not be less than 55 years. The ombudsman will report administratively to the managing director or chief executive officer of the insurer and functionally to the board or the Policyholders' Protection and Grievance Redressal and Customer Management (PPGR & CM) Committee.
As per the proposed norms, the internal insurance ombudsman will consider complaints that have not been responded to within 30 days of receipt, complaints that have been partly or wholly rejected, and cases in which complainants have preferred an appeal.
In each case, the ombudsman must record a 'reasoned decision', which shall be binding on the insurer.
Irdai further stated: 'A complainant aggrieved by the decision of the internal insurance ombudsman of an insurer may, within 30 days of the date of receipt of communication of the decision, prefer an appeal before the insurance ombudsman in accordance with the Insurance Ombudsman Rules, 2017.'
The guidelines will come into effect within three months of the date of their issuance. All stakeholders have been asked to submit their comments and suggestions on the proposed regulations on or before August 17, 2025.