The position of the insurance ombudsman, who hears complaints and redresses grievances of policyholders, will be scrapped.
The National Law Commission of India in its consultation paper on Insurance Act 1938, which recommended that the new act should provide for a full-fledged grievance redressal mechanism for safe guarding the interest of policy holders, has also recommended that the practice of having an insurance ombudsman at major metropolises be scrapped.
In its place, the grievance redressal authorities will be constituted by making appropriate amendments to the Insurance Act, 1938.
The GRAs could be multi-member bodies comprising one judicial member and two technical members. The commission has also said that a certain degree of transparency should be induced in the process of selection of such members.
These authorities according to the commission should be dispersed as geographically widely as possible.
"For instance, there could be GRAs in each of the major cities in the country. This is necessary given the large number of policyholders at present and the prospect of this growing in the future," the commission said.
The powers and jurisdiction of the GRAs would include all the powers and functions presently performed by ombudsman under the 1998 Rules. The rational behind GRA being that the insurance business has increased several fold even while policy holders have not been entirely satisfied with the manner of functioning of insurance companies, particularly in the area of settlement of claims.
"In spite of the ombudsman, complaints continue to be filed in the consumer court. In order to provide a more effective grievance redressal missionary, while at the same time, lessening the burden of the consumer, it is proposed that there should be a full-fledged grievance redressal mechanism," the commission has explained.
