IRDAI moots internal insurance ombudsman mechanism for complaints in upto ₹50 lakh claims

Insurance regulator IRDAI is proposing an internal ombudsman mechanism in insurance companies to address complaints involving claims up to ₹50 lakh.

It will applicable to all insurers, except reinsurers, who have been in operation for more than three years. The objective is to set up an independent and impartial review mechanism within insurers to address unresolved or escalated complaints in a fair, transparent and time-bound manner, the Insurance Regulatory and Development Authority of India (IRDAI) said, placing an exposure draft of the Internal Insurance Ombudsman Guidelines, 2025, for public consultation.

Insurers may appoint more than one internal insurance ombudsman, with well-defined jurisdiction, to ensure effective coverage and responsiveness. The draft guidelines stipulates eligibility criteria, tenure, independence, role and responsibilities and remuneration structure along with general principles to be followed by the internal ombudsman. Towards strong governance and oversight, it is proposed that the internal insurance ombudsman will functionally report to the Board or its Policyholder Protection, Grievance Redressal and Claims Monitoring Committee, with administrative reporting to the MD/CEO.

By institutionalising such an internal but independent mechanism, it sought to further improve quality of grievance handling and enhancing overall consumer confidence in the insurance sector, IRDAI said. The guidelines will come into force after three months from the date of issue. The internal ombudsman will consider complaints to which the insurer has not responded within 30 days of the receipt; or the partly or wholly rejected complaints on which the complainants preferred an appeal.

Customers not satisfied with the decision of the internal ombudsman can within 30 days, of the decision, prefer an appeal before the Insurance Ombudsman.

IRDAI’s proposal represents a significant shift in existing in-house grievance redressal structures to a more independent decision governing body. This is a progressive step, Bharti AXA Life Insurance MD and CEO Parag Raja said, welcoming the move.

This will further create a shift from the current complaint management mechanism to fairer disposal of cases providing customers one more layer to appeal and the insurer a fair third-party view. It will reduce the burden on the external ombudsman. Bharti AXA Life was among among the first few to appoint an internal insurance ombudsman, he said.