What to do if Insurance Claim is rejected?

In a previous post, I had discussed various reasons or mistakes that can lead to rejection of insurance claims.  Keeping those aspects in mind may decrease chances of claim repudiation.

However, despite taking utmost care, claim repudiation may still happen.

What if your insurance claim gets rejected? What will you do? Do you have any recourse?

Yes, you do. You can approach IRDA or Insurance Ombudsman.  A consumer forum and a court of law is your last resort.

There are three ways to seek resolution of your grievance.

1. Escalate to IRDA, the insurance regulator
2. Approach Insurance Ombudsman
3. Approach Consumer Forum or a court of law.

Let’s first look at Grievance redressal process as prescribed by IRDA.

Grievance Redressal Process

Source: IRDA website

Method 1: Escalate to IRDA

Before you escalate matter to IRDA, you should have:

1. Approached the Grievance Redressal cell of the Insurance company. Provided all the supporting documents and taken acknowledgement of the complaint. You can also drop e-mail to Grievance Redressal Cell of the Insurer.

2. If the insurance company does not respond and resolve the issue to your satisfaction within 15 days from the date of complaint, you can escalate to IRDA.

How do you escalate the matter to IRDA?

You can approach the Grievance Redressal Cell of the Consumer Affairs Department of IRDA in either of following ways.

1. Call Toll Free Number 155255 or 1800 4254 723
2. Send e-mail to complaints[AT]irda.gov.in
3. Register your complaint through Integrated Grievance Management System (IGMS).
4. Send a letter or fax (040-6678 9768) to IRDA with your complaint. You can find the complaint form and address here.

In my opinion, IGMS is a good way to raise complaints with IRDA. It has defined turnaround times (TAT) for every activity and an automated escalation system.

You can approach IRDA with any kind of complaint.

This method looks quite simple. As I understand, IRDA will follow up with the insurance company to re-examine the case.

Method 2: Approach Insurance Ombudsman

If you are unhappy with the response or resolution of the complaint by the insurance company, you can also approach the insurance ombudsman.

However, there are a few pre-conditions to be met before you approach Ombudsman.

When can you approach Insurance Ombudsman?

You can approach the Insurance Ombudsman with the complaint if:

1. You have already approached the grievance redressal cell of the insurance company.
2. AND the insurance company has rejected your complaint OR the insurance company has not responded to your complaint in 30 days OR the insurance company has not resolved it to your satisfaction.
3. The value of the claim including expenses does not exceed Rs 20 lacs.
4. You complaint pertains to an insurance plan that you have taken in your capacity as an individual (along personal lines). For complaints pertaining to sole proprietorships/partnership/ corporate clients, you cannot approach ombudsman. However, disputes under group insurance plans where payment of claim is to an individual can also be taken to the Ombudsman.

What types of compliant can you raise with Insurance Ombudsman?

You can file a complaint with the Insurance Ombudsman only if the complaint pertains to following matters:

1. You have not received your policy.
2. There is dispute regarding premium paid or payable.
3. There is delay in claim settlement.
4. Your claim is partially or fully rejected.
5. There is dispute regarding terms and conditions of the policy.

Point to Note

1. The complaint can be made by the policy holder or his legal heirs (in case of policy holder demise).
2. The complaint must be made not later than 1 year after the insurance has rejected the complaint or sent its final reply on your complaint.
3. The ombudsman will not entertain request if you have already approached a court or Consumer Forum in relation to the same matter.
4. There is no need to escalate to IRDA before you approach ombudsman.
5. However, you must have approached Grievance redressal cell of the insurance before you contact the Insurance Ombudsman.
6. There is no need to approach the Ombudsman through a lawyer.
7. The cap of Rs 20 lacs will cover most health insurance plans, critical illness plans and personal accident covers. However, you will have life insurance claim disputes where the amount involved is greater than Rs 20 lacs.
8. There is no fee for approaching the Ombudsman.

How does the Grievance Resolution Work in case of Ombudsman?

The settlement may take various routes:

1. Recommendation:
   1. Based on facts of the case, the ombudsman may arrive at a fair recommendation. By the way, the Ombudsman may even reject your complaint.
   2. Such recommendation shall be made within one month from the date of receipt of complaint.
   3. If you accept the recommendation as full and final settlement, the Ombudsman will inform the insurance company.
   4. The insurance company shall comply with the recommendation within 15 days.
2. Award
   1. If the settlement does not work (you refuse to accept the settlement), the Ombudsman will pass an Award within 3 months of receiving the complaint.
   2. You have to accept the award in writing.
   3. The Award is binding on the Insurer.
   4. The Award is NOT binding on the policy holder. You can approach court of law or consumer forum if you are not satisfied with the decision.
3. Ex-gratia Settlement

The ombudsman can award an ex-gratia payment i.e. an award on compassionate grounds rather than because of any legal obligations. This may happen in cases where even though the insurer’s decision to reject claim has been upheld, the forum takes cognizance of the hardship policyholder (or his heirs) have gone through and grant him a small amount. This may also happen in cases of mis-selling by the insurance agents/company.

How to approach Insurance Ombudsman?

You do not need a lawyer to file a complaint with Insurance Ombudsman.  The complaint can be sent in writing by post, fax or by e-mail. In case you have lodged complaint by e-mail, you must send the hard copy subsequently.

You must approach the Insurance ombudsman under whose jurisdiction the branch or office of the insurance company falls. You can see the complete list of ombudsman addresses here.

If necessary, the ombudsman will conduct hearing of both the parties.

Method 3: Approach Consumer forum or a court of law

This is the final recourse. After escalation to IRDA or approaching Insurance Ombudsman (in select cases) does not work, you can always take the fight to consumer forum or civil courts.

By the way, you can approach the courts without approaching IRDA or ombudsman. However, this is likely to be a lengthy process and not limited by timelines as in first two methods.

So, it is better if your grievance gets resolved in the first two methods.

Additional Read

IRDA Insurance Ombudsman Scheme

Address of Insurance Ombudsman

Insurance Ombudsman FAQs

Case Laws and Judgements by Insurance Ombudsman

How to make a complaint? IRDA website

Integrated Grievance Management System (IGMS)

Turnaround Times (TAT) for various types of complaints