The Finance Ministry has proposed amendments to strengthen the insurance grievance redressal framework, giving more authority to the Insurance Ombudsman.
Key Changes Proposed
- The Ombudsman may now award:
- Up to ₹20 lakh for consequential financial losses caused by unjust or arbitrary actions of insurers or brokers.
- An additional ₹1 lakh for mental harassment faced by policyholders.
- In cases involving unreasonable delays, procedural lapses, or malafide conduct, the Ombudsman may also impose penalties of up to 100% of the award amount, subject to the ₹20 lakh ceiling.
Direct Payment and Eligibility
The compensation must be paid directly to the complainant, and claims must fall within the scope and terms of the insurance policy, including bonuses or interest components where applicable.
Enforcement and Appeals
If insurers or brokers fail to comply with an Ombudsman’s ruling, the Ombudsman may recommend further penal action through IRDAI.
Additionally, the draft introduces an Appellate Authority, providing insurers or policyholders a mechanism to challenge Ombudsman decisions—balancing stricter accountability with procedural fairness.
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