Mumbai and Kolkata figured amongst the top three cities that saw the highest number of insurance complaints being registered during the financial year 2020-21. Insurance ombudsman offices in these cities received 3,137 and 2,021, complaints respectively during the period, as per the Council of Insurance Ombudsman’s annual report for the financial year ended March 31, 2021.
Metropolises routinely account for a higher share of complaints due to greater awareness and presence of ombudsman offices and other facilities. However, Chandigarh was a surprise entrant at number three, with 3,058 complaints registered during the year.
Life insurance dominates the complaints list
Collectively, the 17 insurance ombudsman offices in the country received 26,297 complaints during the year, besides 8,722 grievances that were carried forward from 2019-20. Life insurance complaints constituted nearly half of the grievances received, while the general insurance sector’s share was just 11 percent.
Health insurance, which was in the news last year due to numerous COVID-19 related disputes, accounted for 39 percent of the pie with close to 10,000 complaints. Though the report did not specify COVID-19-related hiccups, it reiterated that most health insurance complaints have their roots in the customary and reasonable exclusion clauses. Many policyholders had to bear the brunt of the disputes between hospitals and insurance companies over COVID-19 treatment costs. This is the clause that health insurers used to deny full payment of COVID-19 claims – policyholders had to bear a significant chunk of the treatment costs out of pocket.
In the annual report, the council of insurance ombudsman advised insurers to put in place effective communication channels with hospitals and policyholders for prompt resolution of policyholder grievances. It also reiterated the advice to insurers of reporting any levy of excess charges and denial of cashless facilities to the state government concerned. The report identified a lack of clarity with respect to complicated wordings in the policies – for example, proportionate deduction, active line of treatment – as areas of concern.
Settling the complaints
Of the total complaints handled during the year, insurance ombudsman offices collectively disposed of 87 percent or 30,596 of the cases. A thousand complaints were resolved by issuing recommendations, while 8,384 complaints went in favour of the complainants – the policyholders. The offices passed awards in favour of the insurance companies in close to 5,600 cases. Over 2,500 cases were withdrawn by the complainants and 13,060 dismissed on the grounds that they could not be entertained.
In the case of life insurance, most complaints pertained to mis-selling, as per the insurance ombudsman’s report. Moreover, most of the complaints were registered against private life insurance companies, followed by total or partial claim rejection. “A number of life cases connected with mis-selling are generally based on fraud and forged signatures of the policyholder on proposal forms and benefit/sales illustrations. Many times, the customer is not given an explanation of the features of the plan and he unknowingly signs the proposal form believing it to be a fixed deposit scheme or one-time payment of single premium,” the report states.
In the general insurance category, motor insurance attracted the highest number of complaints, as policyholders were dissatisfied with surveyors’ assessment of their losses. The reasons for not paying certain expenses are not explained properly to policyholders, the report noted.