Page 38 - The Insurance Times October 2025

Internal Ombudsman

Bridging the Trust

Gap: Why Insurers

Need an Internal

Om Prakash Prasad
Ombudsman General Insurance
Senior Manager

Corporation of India

The Reserve Bank of India (RBI) has already introduced an Internal Ombudsman Scheme for banks,
requiring all banks to designate an independent officer to address escalated consumer complaints.
If appropriate, insurance regulators may implement a similar model for the sector.

Abstract: 2025 for public comments. The proposal requires all insurers
(except reinsurers) who have been in business for three
The article justifies establishing an Internal Insurance years or more to establish an independent, unbiased
Ombudsman (IIO) at the insurer level to assist with
ombudsman within the insurer in order to resolve
unresolved or escalated agent or consumer concerns prior
complaints that were not resolved internally, or that were
to external enforcement action. Given the current escalated by the customer, for all complaints related to
grievance redressal landscape regarding timeliness,
claims of Rs. 50 lakh or less. Insurers can appoint more than
jurisdictional limitation, and poor feedback loops, the paper
one ombudsman with clearly defined areas of responsibility
articulates how an IIO could assist in securing faster, fairer, to ensure faster and more effective coverage.
and more accessible resolutions to concerns. In addition
to handling concerns, an IIO can build consumers' trust, By embedding the independent process in insurers, the
issue early warnings regarding risk, reduce regulatory IRDAI aims to streamline grievance resolution and build trust
interventions, and inform product innovation. Possible for the policyholder, thereby enhancing policyholder safety
challenges to implementation, such as independence, and confidence in the insurance mechanism.
clarity on the future role, cost to implement, and how to
integrate the IIO into governance, are discussed, including Earning customer trust in insurance is not just a business
but a regulatory requirement. Because policies are often
policy recommendations. The IIO is seen as a strategic
administrative leveraging point for building transparency, complex and insurers usually have more information than
accountability, and, over time, consumer loyalty in the policyholders, misunderstandings and disputes are common,
ongoing evolution of the insurance sector. especially around claims, policy terms, and premiums. While
disputes can be settled through courts, arbitration, or
official ombudsman schemes, these channels are often slow,
1. Introduction intimidating, and complex for the average customer to
On July 23, 2025, the Insurance Regulatory and navigate. As people now expect quicker, more transparent,
Development Authority of India (IRDAI) issued its Exposure and fairer resolutions, the traditional approaches are
Draft of the Internal Insurance Ombudsman Guidelines, starting to feel outdated.

The Insurance Times October 2025 35