Managing grievances or complaints is one of the top priorities among all private and public sector companies these days; in fact it is the ‘key’ to the growth of any business in today’s fast moving and competitive market. The Insurance Regulatory and Development Authority of India (IRDAI) is cracking down on insurers who do not handle customer grievances according to laid down procedures. This move has brought the entire redressal framework into focus. Policyholders need to understand how grievance redressal works as well as recourse available if the steps taken fail to satisfy them. Grievance Redress Mechanism is part and parcel of the machinery of any administration. No administration can claim to be accountable, responsive and user-friendly unless it has established an efficient and effective grievance redress mechanism. In fact, the grievance redress mechanism of an organization is the gauge to measure its efficiency and effectiveness as it provides important feedback on the working of the administration. The entire process is governed by the IRDA Protection of Policyholders’ Interests (PPHI) Regulations 2002. The maximum turnaround time for resolving complaints is two weeks. If the complaint is rejected within two weeks, the insurer has to give reasons for the same and guide the policyholder on subsequent recourse options. Insurance companies are also required to have an effective Grievance Redressal Mechanism and IRDA has created the guidelines for that too.
INTEGRATED GRIEVANCE MANAGEMENT SYSTEM (IGMS) :
Today, all major regulatory bodies are concerned about customer rights and fair trade. Almost all major regulators across industries have set up robust grievance management and redressal mechanisms to service and protect interests of end customers. The interest of policyholders is on top of the Insurance Regulatory and Development Authority’s (IRDA) agenda. In fact, a media campaign has been launched in order to educate policyholders and publicise the regulating body’s grievance redressal mechanisms. Another initiative in this direction is the launch of the Integrated Grievance Management System (IGMS), a platform to help customers lodge and track their complaints online.
Additionally, the regulator also has a grievance cell, besides several Insurance Ombudsman offices. The IGMS put in place by IRDAI is the repository of the insurance industry complaints providing not only a platform to raise customer grievances with insurers but also to generate various, analytical reports on Customer grievances registered against the Insurers. If policyholders are not able to access the insurance company directly for any reason, IGMS provides a gateway to register complaints with insurance companies.
GOVT. DEPTT. OF ADMN REFORMS AND PUBLIC GRIEVANCES ( DAPRG):
Insurance industry is essentially a service industry where, in the present context, customer expectations are constantly rising and dissatisfaction with the standard of services rendered is ever present. Despite there being continuous product innovation and significant improvement in the level of customer service aided by use of modern technology, the industry suffers badly in terms of customer dissatisfaction and poor image. Alive to this situation the Government and the regulator have taken a number of initiatives. Apart from the complaints registered in the IGMS Portal of IRDAI, Complaints registered in DARPG Portal against insurers are also referred to IRDAI. The Insurance regulatory body regularly accesses the portal of the DARPG and ensures that complaints relating to the insurance sector are downloaded and necessary action to get them examined by the insurers is taken.
GRIEVANCE REDRESSAL IN LIFE INSURANCE INDUSTRY:
The empowered and enlightened citizens of today is far more demanding and the government, therefore, has to develop, evolve and enable itself to meet the evolving demands of the society that it has to serve. The society today is impatient with the old system of governance which is not coming up to its expectations. During 2015-16, the insurance companies resolved 99.56 per cent of the complaints handled. The private life insurers resolved 99.36 per cent of the complaints reported, while LIC resolved 100 per cent of the complaints as a result of which there were no pending complaints of LIC as at 31.3.2016. As can be seen from the above, the classification as per the IGMS in terms of grievance Redressal guidelines indicates a marginal decrease of 3% in the complaints under Unfair Business Practices during 2015-16 over 2014-15 and 1% increase in the complaints reported under Claims, Others and Policy servicing. Processing and ULIP Related has maintained the same share to the total complaints during the last 2 years.
GRIEVANCE REDRESSAL IN GENERAL INSURANCE INDUSTRY:
The non-life insurance companies resolved 98.41 per cent of the complaints handled during the year 2015-16. The private non-life insurance companies resolved 98.96 per cent and public nonlife insurance companies resolved 97.12 per cent of the complaints handled by them. As at 31st March, 2016, a total of 971 complaints were pending for resolution, out of which 446 were belonging to private sector insurance companies and 525 were pertaining to public sector insurance companies. It can be seen from the above that there is a 1% reduction of the complaints reported under premium and 1% increase in the complaints reported under Claims during the year 2015-16 as compared to 2014-15. Complaints reported under all other categories have maintained the same share as that of the previous year.
When it comes to general insurance, grievances usually pertain to the non-settlement or partial settlement of claims, pre-existing illnesses, delays in approving claims, the refusal to renew health insurance policies and loading of premium. In the case of life insurance, grievances pertain to the unilateral change of policy terms and conditions after issuing a policy and the rejection of claims on grounds of suppression of material facts by the insured. The analysis of the complaints under policy type indicates that health insurance complaints are more during the last 2 years as compared to the complaints reported under motor insurance.
Customer centric organizations today look for a robust complaints tracking system to ensure superior customer care support and service to their esteemed customers. Inside the organization, internal employee force, complaint redressal process & policies and automation tool together are responsible for successful functioning of the customer care function. The first two of these concerns are overcome with proper training and motivation of employees, buying external expertise or consultancy for best processes and polices inputs from regulatory compliances etc. But the major that organizations face is in deciding right automation engine, which is robust and flexible enough to adapt to their requirements.
REDUCTION IN LIFE INSURANCE GRIEVANCES:
Reckoned among the fastest growing industries, the life insurance industry of India has 23 private license-holders running their business in this sector. The Life Insurance Corporation of India (LIC), which is the only player in the public sector, contributes over 70% to the business. The remaining area is covered by the 23 private sector companies. Life Insurance Corporation of India (LIC) was established on 1 st September, 1959, continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. The study would provide some insights into the areas, specifically consumer protection and the awareness with reference to the grievances settlement operations of the Life Insurance Industry in India. A study finds and concludes that the Life Insurance Industry have significantly improved their performance with regard to redress the grievances of the insurance customers.
In number of complaints reported, there has been a considerable reduction of about 26.62% in the year 2015-16 (204701 in 2015-16 as against 278992 in 2014-15). As regards the pending complaints as at 31.3.2016, In case of life insurance, an insurance company has to settle death related claim in a matter of 30 days. If there are doubts and a need for investigation to authenticate the claim, then it has to be done within 6 months. There is no space for open-endedness. Also, an insurance company has to clarify on its requirements within 15 days, if a policy holder or his/her nominee/s raise claim. It is observed that 935 complaints were pending as against 6109 as at 31.3.2015
SPEEDY DISPOSAL OF NON LIFE GRIEVANCES:
There is no doubt that grievances continue to arise because of a high systemic tolerance for delay, poor work quality and non-accountability in every day performance of functions. Failure to review archaic, redundant and incongruous rules, policies and procedures and to initiate simple, workable systemic changes is another cause for grievance generation. However, insurance companies, which work with policies and procedures on a day-to-day basis, do not appear to have developed the ability to continually look ‘within’ and identify deficiencies. All these factors have ensured that grievances, once arisen, many a time do not get resolved in ‘normal’ course and need intervention at the highest administrative level. Insurers are required to acknowledge the complaint in writing within three working days of receipt. The grievance redressal norms also require the company to specify the period by when this issue is likely to be resolved. If a resolution is affected within three days, insured will be intimated about the same. If not, the company will have two weeks to send a final letter of resolution. If the complaint is rejected, the company has to disclose the reasons for doing so and will also need to inform the policyholder about other redressal avenues available. There has been a reduction of 1605 complaints in the year 2015-16 as compared to the number reported in 2014-15(59083 in 2015-16 as against 60688 in 2014-15). As regards the pending complaints, the no. as at 31.3.2016 reads 971 as against 2099 pending as at 31.3.2015.
A FULL PROOF GRIEVANCE REDRESSAL SYSTEM:
If a policyholder’s problem has not been solved, the next step is to take the grievance to the regulator through the IGMS, the IRDA Grievance Redressal Cell or the Insurance Ombudsman offices. Most companies are now integrated on the IGMS platform. Remember, though, that this route can be adopted only if the policyholder does not receive a response within 15 days of bringing the grievance to the company’s notice. With the IGMS, one can route the complaint through the newly-launched website (www.igms.irda.gov.in). But an insured need to first register a complaint on the portal to be able to lodge and subsequently track it. A token number is provided by IRDA for follow-up. Once lodged, complaints are escalated to senior executives of insurance companies (claims under Rs 20 lakh in personal accident and health, are directed to the Insurance Ombudsman.) The details of the complaint can be viewed online by the consumer, the insurance company and the IRDA. In this mode of redressal, no action is taken by the IRDA, and the insurance company concerned needs to deal with the grievance. The idea behind setting up the IGMS is to monitor complaints and analyse patterns. While the nature of the complaints varies, the most common complaints are those regarding non-settlement of claims or non-receipt of the policy document.
PROMPT DISPOSAL:
Indian Insurance Industry has witnessed a considerable reduction of 75896 complaints in the year 2015-16. A total of 263784 complaints were reported in the year 2015-16 as against 339680 in the year 2014-15. The reduction in number of complaints expressed in terms of percentage is about 22.34%. With regard to the pending complaints as at 31.3.2016, 6 Life insurers and 6 Non Life Insurers have shown NIL pending. During the Year 1874 grievances have been referred to IRDAI of the grievances registered in DARPG Portal. A total of 1698 grievances have been disposed of during the year. 237 grievances were pending as at 31.3.2016. Out of 237 grievances pending as at 31.3.2016, No grievance was pending resolution beyond the prescribed TAT. An explosive issue today in context of public grievance redress is the pace and phasing of the movement towards open markets after the gradual abandonment of centralized planning model. The Government is today withdrawing from various service sectors traditionally monopolosized by it and private enterprise is moving in. This may lead to a scenario where the Government monopolies are replaced by even more vicious private monopolies or cartels in the absence of adequate regulation, enforcement and recourse to grievance redress.
MOVEMENT OF COMPLAINTS:
No grievance is to be rejected without having been independently examined. At a minimum, this means that an officer superior, to the one who delayed taking the original decision or took the original decision that is cause for grievance, should actually examine the case as well as the reply, intended to be sent to the grievance holder.
Some companies develop their own custom built systems, which take ages, battalion of resources and months to develop. Some go for readymade CRM tools, but such systems are rigid enough to meet: organizational needs, adherence to compliances, process flow specific requirements and flexibility. Custom changes are again time and resource consuming, and add more rigidity to future change management. Also, overheads and maintenance costs on such systems increases exponentially over a period. Grievances should be necessarily acknowledged, with an interim reply within 3 days of receipt and redressed within 3 months of receipt in the Organisation. The same time limit should apply even if co-ordination with subsidiary offices or another Department is involved. In such instances special efforts, to be suo moto disclosed when reports are called, should be made. This procedure is good in theory and looks attractive on paper, but is not effective. Most often, the grievance cell ignores the complaint, or acts like a postman, forwarding the grievance to the divisional office and communicating the same response to the insured.
An annual review of laws, rules, regulations, instructions and procedures be carried out with a view to simplify the procedure making the administration more transparent, accountable and citizen-friendly. Information Technology should be employed in re-engineering of governmental processes in order to improve efficiency and effectiveness and ensuring transparency and accountability. There is another aspect of the system as well. If the company ignores the consumer’s dissatisfaction and grievance, he/ she would approach the relevant government agency and regulatory body to seek redress of his/ her grievance.
ZERO PENDENCY:
Analyse the nature and cause of grievances with the aim of identifying systemic deficiencies in laws, rules, regulations, policies, instructions, work practices and procedures, and effecting systemic changes to remove/correct these deficiencies. The analysis should be conducted in the month of April every year and studies of identified grievance prone areas be undertaken. Recommendations made in the studies should be implemented by December of that year so as to bring systemic changes and remove the cause of grievances.
The redress of consumer grievances is a pre-requisite for ensuring long-term customer loyalty and profitability for any business concern. In service companies, handling of customer complaints is all the more necessary. In fact, consumer grievance redress by companies is an effective way of self-regulation, which is beneficial for not only the consumer but also the company and the government.
OTHER METHODS OF GRIEVANCE REDRESSAL:
The first point of contact for a policyholder should always be the insurer. The traditional role of civil service which was of administrator, service provider and controller of development activities has to make way for the new roles of facilitator and regulator so as to create best environment and conditions in the country for building a nation of excellence. While consumer groups remain apprehensive about the steps being taken by the regulator to protect policyholders’ interests, these moves are definitely a step in the right direction.
If a policyholder is unhappy with the company’s response, he can approach the insurance ombudsman in his city 30 days after you first lodged the complaint with the insurer. It is a quasi judicial body which deals with cases up to a value of Rs 20 lakh and has the power to award compensation to aggrieved policyholders. The ombudsman primarily comes into the picture for complaints that involve monetary compensation; IGMS is the way to go for simpler complaints. The ombudsman framework has to turned out to be as helpful as it was expected to be. Unlike the Grievance Cell, the Ombudsman does have the power to pass orders. Cases of up to Rs 20 lakh fall under the ambit of the Ombudsman’s powers. The Ombudsman addresses issues related to rejection or delay in the settlement of claims, disputes on premiums and non-issuance of a document after collecting the premium. Complaints have to be filed with the Ombudsman office under whose jurisdiction your complaint falls. Recommendations can be made within a month of the receipt of the complaint, while a verdict has to be given within three months. If the need arises, the Ombudsman can also award compensation to the policyholder. The Ombudsman is appointed by the Insurance Council and is supposed to be independent. The order passed by the Ombudsman is binding on the insurance company. It is up to the insured whether to accept the award or to file a consumer complaint if he/she is dissatisfied with such an award. If the verdict is acceptable to the insured, he/she is required to intimate the Ombudsman of this within 15 days. This requires a paradigm shift in governance to a system where the citizen is in the centre and he is consulted at various stages of formulation and implementation of public policy. To achieve this objective, India needs a public service which is capable, innovative and forward looking.
Consumer courts are the last resort for a policyholder. One need not approach the ombudsman before knocking on the consumer courts’ doors, one can do so directly. Approaching the consumer forum would be the simplest, fastest and most economical remedy. The forum is better accessible, and awards compensation and costs. The insured can also approach consumer forums or civil courts for relief if the insurer fails to comply with the Ombudsman’s order or they are not satisfied with it.
If a policyholder is unhappy either with the service that he gets from the insurance company, or with the product itself, or for any other reason; then his grievances must be tended to with utmost priority. IRDA has taken utmost care to see that the grievance cell operates in an organized manner. Hence, specified the regulator body has specified turnaround times within which the insurance company is bound to respond to the complaint. IGMS is expected to help thousands of disappointed customers and also ensure that insurance companies provide appropriate solutions. IRDA has recently circulated a depressing note on the escalating numbers of unsettled protests from policyholders, noting that insurance companies do not resolve complaints in the prearranged manner. Subsequently, policyholders have escalated their complaints (non-life and life insurance) to regulatory authorities of ombudsmen and IRDA. The Insurance Regulator has strictly asked insurance companies to resolve the grievances in the stipulated period, else insures may lose their license. The governing authority has further emphasized that frontline staff, customer service staff and higher officials should be made aware of the situation. India has a full proof grievance redressal mechanism and so no policyholder should suffer for the follies of insurers.
About the Author
JAGENDRA KUMAR
Ex. CEO, Pearl Insurance Brokers
71/143, “Ramashram” Paramhans Marg,
Mansarovar, JAIPUR-302020
References:
- IRDA Annual Report 2015-16
- http://www.policyholder.gov.in/report.aspx
- http://www.freepatentsonline.com/article/Paradigm
- http://articles.economictimes.indiatimes.com
- Newspapers & Journals
