9. Customer Protection
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Transcript of 9. Customer Protection
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CUSTOMER PROTECTION
BY
ANIL KUMAR SINHAPROFESSOR,KEJRIWAL INSTITUTE OF MANAGEMENT ANDDEVELOPMENT STUDIES, NAMKUM, RANCHI
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CUSTOMER PROTECTION
Like any other business organisation life
insurance company also aims to makeprofit.But profit should not be made at theexpense of customers interest which is
the prime responsibility of the Insurancecompany.To fulfill this objectives the industry hastaken various measures.
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Code of Conduct for insurer
In the process of sale, the insurer or itsagent or any other intermediary shall act
according to the code of conduct prescribedby
The authority
The LI Council
The recognized professional body orassociation of which insurance intermediaryis a member.
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Type of complaints
Some of the most common complaintsregistered against insurers are:
1. Claim related complaints
Repudiation of the claim;
Survival benefit not being paid;
Non-payment of annuities; Claim amount not correct ; and
Penal interest not being paid;
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Type of complaints
2. Policy servicing related complaints
Non-receipt of policy bond;
Cancellation of policy;
Error in policy schedule;
Issue of duplicate policy;
Alterations in policy; Nomination/assignment of policies;
Partial withdrawal-related;
Non-receipt of statement of account/bonus
NAV-related in case of ULIPs: and Free-look refund.
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Type of complaints
3. Policy lapsed related complaints
Revival of lapsed polices;
Non-payment of surrender value;
Correct surrender value not being paid;and
The consequence of non-payment ofinterest on loans in lapsed policy causingforeclosure of a policy;
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Type of complaints
4. Complaint against agents behavior.
Wrong information given by Agent
No service is provided
Misappropriation of Funds
Illegal gratification, Hostile behavior
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Measures available for customersprotection
Regulations issued by IRDA
Insurers internal grievance redressersystem.
The Insurance ombudsman.
The role of the consumer Affairs
Department of the IRDA.The IRDA Grievance Redress cell.
Integrated Grievance Management
System.
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Regulations issued by IRDA
1. Issue of prospectus
2. Providing material information
3. Insurance agent should suggested policyto prospective customer as per theirneed.
4. Explain forms and documents to thecustomer.
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Insurers internal grievanceredressal system
The internal grievanceredressal mechanism to
be followed by everyinsurer.
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Insurance Ombudsman Scheme
The institution of Insurance Ombudsmanwas created by the Government of India
notification dated 11 Nov 1998.The purpose was to resolve Insuredcustomers grievances quickly and tomitigate the problems involved inredressing these grievances.
This institution is of grate importance andrelevance for protecting policy holdersinterests and also in building confidence inthe system.
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Appointment of InsuranceOmbudsman
The governing body of insurancecouncil issues orders for appointment
of the insurance Ombudsman on therecommendations of the committeecomprising of Chairman of Insurance
Council, Chairman of IRDA, Chairmanof LIC, Chairman of GIC and arepresentative of the Central
Government.
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Eligibility and Terms of office
Ombudsman are drawn from InsuranceIndustry, Civil Services and Judicial
Services.
An insurance Ombudsman is appointed for
a term of three years or till the incumbentattains the age of sixty five years,whichever is earlier. Re-appointment isnot permitted
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Territorial jurisdiction ofOmbudsman
The governing body has set up twelveombudsmen offices across the country.
Each ombudsman office has been allotteda different geographical area as their areaof jurisdiction and they may hold sittingsat various places within their area of
jurisdiction in order to expedite thedisposal of complaints.
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List of Office of InsuranceOmbudsman
(1) Bhopal, (2) Bhubaneswar, (3) Cochin,(4) Guwahati, (5) Chandigarh, (6) New
Delhi, (7) Chennai, (8) Kolkata, (9)Ahmedabad, (10) Lucknow, (11) Mumbai,(12) Hyderabad.
The Ombudsman may hold sitting atvarious places within their area of
jurisdiction in order to expedite disposalof complaints.
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Functions of Ombudsman
The Insurance Ombudsman has two typesof function to perform
Conciliation: and Making awards.
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Functions of Ombudsman
The Insurance Ombudsman is empoweredto receive and consider complaints inrespect of personal lines of insurance from
any person who has a grievance againstan insurer. The nature of the complaintmay relate to any grievance against theinsurer. Examples include:
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Functions of Ombudsman
Any partial or total repudiation of claims by theinsurance companies;
Any dispute with regard to premium paid or
payable in terms of the pay Any dispute on the legal construction of the policy
wording in the case that such a dispute relates toclaims;
A delay in settlement of claims; and Non-issue of any insurance document to customers
after receipt of premium;Insurance companies are required to honor theawards passed by the Insurance Ombudsman(which must be made within three months) within15 days.
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Manner of lodging complaint
Before lodging a complaint: The complainant should have made a
representation to the insurer named in thecomplaint and the insurer has either rejectedthe complaint, failed to respond within a periodof one month, or the customer is dissatisfiedwith the insurersresponse; and
The same subject of complaint should not bepending before any court, consumer forum orarbitrator.The complaint must be made within one year
of theinsurers
response.
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Complaint resolution Process
1. Withdrawal / Settlement
It is the duty of the Ombudsman to promotea settlement by agreement between thecomplainant and the insurance companythrough mediation or conciliation. To achievethis, the Ombudsman may follow such
procedures as it considers appropriate. Ifthere is an agreement between the twoparties and the issue is settled, the twoparties may go ahead with it and the casemay be withdrawn
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Complaint resolution Process
2. Recommendation
If there is no agreement or settlementbetween the two parties within what theOmbudsman feels to be an appropriate
timeframe, then the Ombudsman maymake a recommendation to what is, inhis opinion, fair to both the parties.
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Such a recommendation shall be made no laterthan one month following receipt from the
complainant and copies will be sent to thecomplainant and the insurance companyconcerned.
The recommendation is binding on the complainantif they accept all terms of the recommendation in
full and final settlement of the complaint.If the complainant accepts the recommendationthey will send a communication in writing within 15day of the date of receipt acknowledging theiracceptance.
If the recommendation is accepted by thecomplainant, then it will be binding on the insurerand it will have to fulfill its obligation.
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3. Award
If there is no agreement or settlement
and the recommendation is also notacceptable to the complainant, then inthis case the Ombudsman will grant anaward.
This award is binding upon the insurancecompany.
If the policyholders is not satisfied withthe award of the Ombudsman they canapproach other venues such asConsumer Forums and Courts of law forredressal of their grievances.
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Non acceptable / Non Maintainablecomplaint
Complaints received which the Ombudsmanfeels are without sufficient cause or wherethere is no loss or damage or inconvenience
suffered by the complainant, it may beclassified as non-acceptable or non-maintainable complaint.
Such complaint can be dismissed by theOmbudsman as non acceptable or non
maintainable.
The Ombudsmans powers are restricted toinsurance contracts of value not exceeding Rs.20 Lakhs.
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Other reasons for dismissal ofcomplaint
Complaints can be dismissed by theOmbudsman in the following cases also:
If the complainant approaches theOmbudsman directly without firstapproaching the insurer and giving theinsurer an opportunity to resolve theirgrievance.
If the same complaint on the subject ispending before any court, consumer
forum or arbitrator.
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Conclusion
The steady increase in the numberof complaints received by variousombudsman offices shows that thepolicyholders are placing their
confidence in the Institution ofInsurance Ombudsman.
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