The ombudsman dilemma: Free relief or stacked deck?

With rejected claims and rising dispute barriers, can policyholders match the insurers' clout?

- Aprajita Sharma

When businessman Mukesh Garg's two claims were rejected, he represented himself before the insurance ombudsman, a statutory body for out-of-court settlements, but sought third-party help with the paperwork—a decision he later regretted.

"Two of my claims got rejected in a year. The ombudsman issued an award in my favour in the first one, but when he found out that a company helped me out, he did not hear my case and passed an award against me in the second one."

Garg's situation highlights a significant challenge in the system. While the policyholder and insurance company get a chance to present their cases, neither can engage a lawyer or third party.

For most policyholders, navigating this process can be daunting. After an insurer rejects a claim, a policyholder's first step is approaching the insurer's grievance handling department. If the issue is not resolved, they can reach out to the ombudsman. The hearing date is fixed and both sides present their arguments either online or physically.

No level-playing field

One does not have to pay any fee to lodge a complaint with the ombudsman. It is a cost-effective system where claims up to ₹50 lakh can be resolved. However, people unaware of its existence or those who do not understand the process may reach out to third parties seeking support. Ombudsman officers can't learn about it, but if they do, they may view it in a negative light.

A couple of complainants told Mint they were asked to write a letter stating they would not pay money to any third party. Mint has seen one such copy.

"I was told my case is genuine but I still would not get my claim because I sought an agency's help in filing my case with the ombudsman. I am in a full-time job. My husband has health issues. I don't understand insurance. If I sought somebody's help in doing the paperwork to ease my burden, why is it wrong?" said a person seeking anonymity as her case is sub-judice.