Redressal of grievances under the Liability Insurance : An overview

Insurance, at its core, is a promise—a promise of protection when life takes an unexpected turn. Yet, when that promise is delayed or denied, it does not just break trust; it can break lives and livelihoods.

Imagine this: a family walks into a bustling bakery in Muvattupuzha, Kerala, expecting nothing more than an evening snack. Hours later, they are admitted to the hospital with severe food poisoning. What followed was not just medical trauma but also a long battle for justice, as the family sought compensation for their suffering. The Ernakulam District Consumer Commission eventually ordered the bakery to pay ₹50,000 for negligence, making it clear that businesses cannot hide behind silence or delay when lives are at stake.

In another case, the failure of a restaurant to deliver an Onam Sadya feast to a customer’s home might sound trivial at first glance. But in Kerala, Sadya is not just food—it is culture, pride, and identity. The customer, left embarrassed in front of guests, approached the Consumer Court, which recognized this emotional attachment and ordered the restaurant to pay ₹40,000 in damages, along with a refund of the feast cost. This was not merely about late food delivery—it was a reminder that businesses are accountable for the promises they make.

Some stories are far more tragic. In Pune, two young brothers drowned in a resort pond that had inadequate safety measures and poor supervision. What was supposed to be a family holiday turned into an irreparable loss. The Kerala Consumer Forum later ordered the resort to pay an unprecedented ₹1.99 crore in damages to the grieving parents. The judgment did more than just punish negligence—it reminded the industry that lives cannot be replaced, but justice can ensure accountability.

And it is not only India. In London, a café owner watched in horror as a customer slipped on a wet floor and suffered grave injuries. Instead of quick relief through insurance, the owner faced delays, endless paperwork, and silence from the insurer, forcing escalation to the Ombudsman. Similarly, in another UK restaurant, a diner slipped on a spilled dessert. Staff had been alerted but failed to act. The insurer dragged its feet until legal intervention finally forced payment of £2,600.

These stories echo a landmark moment in legal history: Ward v Tesco Stores Ltd (1976). When a customer slipped on spilled yogurt, Tesco argued they had a proper cleaning system. The court disagreed, ruling that the very presence of the hazard was proof of negligence. The principle of res ipsa loquitur—“the thing speaks for itself”—was applied, forever cementing the duty of businesses to ensure safety and insurers to honor liability swiftly.

What unites these stories—from Kerala’s food poisoning case to Tesco’s yogurt spill—is not the accidents themselves, but what followed: delays, disputes, and denials. The pattern is universal. Businesses buy liability insurance for peace of mind, but when insurers falter in grievance redressal, that peace shatters.

Even with such strong legal precedents and documented frameworks, policyholders today continue to encounter significant impediments when seeking redress under liability insurance. Almost every insurer in India now boasts of grievance cells, online portals, toll-free numbers, and escalation matrices. Yet, as reflected in Ombudsman data, the reality tells another story: more than 50,000 complaints were filed in FY 2023–24 alone, and nearly one-third involved delays or disputes over claim repudiation. The system, though elaborate on paper, too often collapses under its own weight in practice—marked by prolonged processes, lack of transparency, and communication gaps.

The irony is sharp: an industry designed to protect against risk frequently transfers that very risk back to the insured through bureaucratic hurdles. Policyholders find themselves not only fighting for compensation but also fighting the system meant to safeguard them. Until grievance redressal evolves into a mechanism that is not only structured but also swift, humane, and transparent, the promise of liability insurance will remain half-kept—a shield that exists in theory, but wavers at the moment of impact.

A Historical Perspective on Public Liability Insurance

As public liability insurance became integral to modern business risk management, the expectation was that insurers would offer not only financial protection but also prompt and fair resolution in times of distress. However, the ground reality often paints a different picture. Despite purchasing policies with the intent of securing peace of mind, many policyholders—particularly small businesses—experience frustration and uncertainty when filing claims. Whether it is a café owner dealing with third-party injury case or a contractor dealing with property damage claims, delays and denials in claims settlement are becoming routine issues. Documentation complexity, varying interpretations of wordings, and inconsistent customer service often lead to complaints needing formal redressal.

In the United Kingdom and many other countries, the scale of liability exposure is considerable. The Association of British Insurers (ABI) states that UK insurers settle more than £3.5 billion a year in liability claims, reflecting the prevalence of use and dependency on such insurance products. With growing volumes of claims, so grows conflict—particularly where companies perceive the insurer response as poor or slow. To react, regulatory bodies instituted formal grievance redress mechanisms. The UK’s Financial Ombudsman Service (FOS), for example, provides policyholders with the opportunity to escalate complaints in case of non-resolution of issues within eight weeks by insurers. FOS releases anonymized decisions on cases and seeks to settle disputes impartially and without charge for the complainant.

A similar situation prevails in India, where liability insurance is picking up pace across industries. Figures from the General Insurance Council indicate liability insurance premium in India exceeded ₹2,000 crore in FY 2022–23, indicating increasing legal awareness among companies. To acknowledge the increasing grievances, the Insurance Regulatory and Development Authority of India (IRDAI) made it mandatory for each insurer to have a Grievance Redressal Officer (GRO), keep complaint-resolution timelines, and provide escalation mechanisms via the Integrated Grievance Management System (IGMS).

Even with these processes, grievance settlement is not always smooth. Real-life examples illustrate this disconnect. For instance, a customer in a UK restaurant who fell on dropped dessert was awarded £2,600 compensation—but only after the restaurant’s insurer dithered and the case was pursued through legal aid. Even in situations of obvious negligence, such delays reflect systemic inefficiencies in the response of insurers. These judgments highlight that it is just the starting point to have an insurance policy; the effectiveness of grievance redressal ultimately decides how safe the policy actually is.

This is not a recent issue. The 1976 case of Ward v Tesco Stores Ltd is still one of the most heavily cited precedents in occupiers’ liability law. Mrs. Ward fell over yoghurt which had been spilled in a Tesco store. Though Tesco asserted regular floor inspections were carried out, they could not demonstrate this sufficiently in court. Invoking the doctrine of res ipsa loquitur—”the thing speaks for itself”—the court held Tesco responsible, reaffirming businesses have a duty of care towards the public and insurers must settle claims when such duty is violated. The case highlights the expectation that insurers must act promptly and not procrastinate with rightful settlements.

Since the global liability insurance market is expected to reach $432.81 billion in 2032, at a growth rate of 5.4%, the requirement for grievance redressal processes that are efficient and transparent is even more essential. In the absence of timely settlement of claims and transparency of communication, the intent of liability insurance—financial relief and legal representation—is undermined. Therefore, grievance redressal is not just an operational process but a core pillar of trust in the insurance industry.

The Common Categories of Complaints in Public Liability Insurance

Realizing the nature and number of complaints under public liability insurance is imperative to assessing the efficiency of grievance redressal mechanisms. This section displays two major data tables—one indicating year-wise trends in complaint numbers and disposal, and the other illustrating the most frequent categories of grievances complained of by policyholders.

The initial table illustrates the volume of complaints received and settled by the Insurance Ombudsman over chosen financial years between 2008 and 2024. It shows the way complaint numbers have evolved over time and how effectively the redressal system has managed them.

Table 1: Year-wise summary of complaints received and disposed of by the Insurance Ombudsman (2008–2024).

Source: Council of Insurance Ombudsman

Subsequent to this, the second table displays a complaint-wise breakup of grievances, drawn from a sample of 100 cases. It aids in determining the most common issues policyholders encounter—like repudiation of claims, delays, and gaps in documentation.

Table 2: Frequent categories of complaints in public liability insurance (on the basis of 100 Ombudsman-disputed cases).

Collectively, these data present an overall picture of both the extent and character of complaints in this insurance market, with significant insights into repeat issues and scopes for service enhancement.

Performance of Insurance Ombudsman (India): FY 2022–23 & 2023–24

During the previous two fiscal years, India’s Insurance Ombudsman scheme has seen a dramatic shift in grievance redressal processes—characterized by increased disposal rates, digitalization, and a greater emphasis on mediation. These trends have improved the efficiency and convenience of complaint settlement, enabling quicker and more transparent services to policyholders.

Table 3: Comparative Overview: FY 2022–23 vs. FY 2023–24

In the past two years, India’s Insurance Ombudsman system has made impressive strides—not only in terms of quantity, but also in the way it serves policyholders. During 2022–23, 10 out of 17 Ombudsman centres managed to dispose of all grievances by the end of the year, beginning the following year with a clean slate. Even in 2023–24, over 49,000 grievances were addressed, and remarkably, 87% of them were disposed of in a mere 90 days. This indicates that redressal within a timely manner is truly becoming a priority, not only a policy target.

What is heartening is the trend towards mediation as the chosen tool to settle complaints. The percentage of cases resolved by conciliation by mutual agreement rose from 22.39% in 2022–23 to 42% in 2023–24—an enormous jump. Delhi, Chandigarh, and Bengaluru were among those centres that excelled by settling more than half of their complaints by recommendation, sparing time, tension, and effort for insurers as well as complainants.

Another significant leap forward has been the adoption of digital platforms. During the last financial year, 40% of complaints were received online, and 72% were heard and settled digitally. From digitally signed orders to smart functionalities such as auto-follow-ups through email and OTP-based secure downloads, the process is definitely transforming to be quicker, simpler, and more consumer-friendly.

And it’s not merely about convenience and speed—there’s a deliberate shift towards sustainability as well. With more than 2 lakh pages of paper saved thanks to digital awards, Ombudsman offices are demonstrating that improved service and eco-friendlier practices go together. There are already plans to implement real-time tracking and automated notifications for hearings so that the experience can become even smoother for policyholders in the years to come.

Grasping the Underlying Causes of Grievances in Public Liability Insurance

Even with the rightful possession of an insurance policy, most policyholders are surprised when claiming. What can be a simple process becomes a source of frustration manifested through delays, disagreements, or denials. Public liability insurance, though crucial for safeguarding businesses from third-party perils, is no exception. Misunderstanding policy conditions to communication issues, complaints are formed for a variety of reasons—most of which are avoidable.

The next part discusses the most prevalent causes of these complaints based on real-life examples, data points, and regulatory materials.

1. Claim Repudiation and Rejection

Claim repudiation continues to be the leading cause of grievance among policyholders. These rejections are often due to discrepancies between the insured’s expectations and the insurer’s interpretation of coverage.

• Fact: In FY 2023–24, Indian health insurers repudiated nearly 13% of claim value, with an additional 9% of claims pending for further review (Business Standard, 2024).
• Insight: Common reasons for repudiation include non-disclosure of material facts, violation of policy terms, or disputes over causa proxima—the nearest cause of the incident.
• Example: In a notable case, the Telangana State Consumer Commission ruled that LIC had wrongfully repudiated a ₹7.5 lakh accidental disability claim. The insurer was directed to pay the full amount along with interest and compensation.

2. Delays in Claim Settlement

Timely claim settlement is critical, especially for small businesses relying on insurance for financial continuity. Unfortunately, processing delays remain a recurring issue.

• Fact: IRDAI mandates that insurers settle claims within 30 days of receiving all required documents, beyond which they must pay a penalty at bank rate +2% (IRDAI Circular, 2023).
• Insight: Delays are usually attributed to incomplete documentation, pending third-party reports (like FIRs), or internal inefficiencies.
• Example: A policyholder waited eight years for partial compensation following a vehicle theft, due to prolonged FIR clarification. The claim was finally settled after consumer forum intervention.

3. Disputes Over Policy Terms and Exclusions

Many grievances arise when claimants discover that specific incidents are excluded from coverage or that key policy clauses were not clearly communicated at the time of purchase.

• Fact: Nearly 35% of insurance-related consumer complaints in 2023–24 involved issues with policy wording, hidden exclusions, or ambiguous terms (Economic Times, 2024).
• Insight: Disputes often occur when policyholders interpret coverage differently than what is defined by the insurer, particularly in liability claims involving grey areas like negligence or third-party injury.
• Example: A court reversed New India Assurance’s denial of a stock damage claim, citing that the insurer had failed to obtain clear consent for revised policy terms upon renewal.

4. Premium-Related Disputes

Though not as frequent as claim issues, disputes regarding premium calculation or post-claim adjustments have become more visible.

• Fact: New India Assurance reported a low claim repudiation ratio of 0.2% in FY 2022–23, yet premium hikes after minor claims triggered dissatisfaction (Telangana Today, 2023).
• Insight: Policyholders often contest premium increases that follow a claim, especially when they believe the increase is disproportionate or unexplained.

5. Non-Issuance or Delay in Documentation

Policyholders frequently report that after payment of the premium, they do not receive timely documentation such as the policy bond or endorsements.

• Fact: According to updated IRDAI guidelines, insurers cannot reject claims solely because the policy document was not issued, provided the premium was paid and coverage presumed.
• Insight: However, technical errors or backend delays still prevent timely issuance, complicating claim filing processes.
• Example: Several cases involve policyholders unable to prove coverage during emergencies because they lacked physical or digital documentation.

6. Poor Communication and Follow-Up

Communication breakdown between insurers and insured individuals contributes significantly to grievances.

• Insight: Policyholders often report delayed updates or vague responses such as “claim under review,” with no escalation mechanism in place.
• Example: A customer shared that they had to wait over two months for updates from Care Health Insurance, eventually considering an Ombudsman complaint due to poor service.

7. Irrelevant or Excessive Documentation Demands

In some cases, insurers have been reported to demand documentation unrelated to the nature of the claim, creating unnecessary hurdles.

• Insight: This tactic may be used to delay or discourage claims, particularly in high-value or sensitive scenarios.
• Example: One complainant, whose spouse died due to drowning, was asked for psychiatric and ADHD-related records, which had no connection to the incident.

8. Lack of Awareness and Escalation Pathways

Policyholders often do not know how or where to escalate a claim-related issue, resulting in delayed redressal.

• Fact: The average resolution time for complaints escalated to the Insurance Ombudsman has increased from 45 to 90 days in recent years (Telangana Today, 2024).
• Insight: This is largely because policyholders file complaints late or submit incomplete documentation, unaware of timelines or support platforms like IGMS.

Business Impact of Timely Grievance Resolution

“A single delayed claim doesn’t just affect numbers—it can derail payrolls, pause expansions, and break the trust a business has built over years.”

For a business, insurance is more than a regulatory necessity—it’s a cushion against crisis, a contract of trust. When a third-party claim arises under public liability insurance, the speed and fairness of its resolution can determine whether a business bounces back or breaks down. A swift settlement enables continuity, protects jobs, and restores customer and investor confidence. On the other hand, prolonged delays force businesses to dip into reserves, take on unplanned debt, or suspend operations altogether.

The importance of timely resolution lies in its ability to stabilize operations at a time of disruption. It ensures that the policy functions as intended: to transfer risk away from the business and provide financial breathing room when it’s needed most. For small and medium enterprises especially, time-bound claim handling can be the difference between reinvestment and retrenchment.

What follows is a data-backed examination of how timely grievance redressal is not just a legal or regulatory goal, but a driver of business resilience, operational efficiency, and long-term profitability.

1. Preservation of Business Cash Flow

One of the most immediate impacts of delayed claim settlement is on a business’s cash flow. SMEs and retail businesses often lack the liquidity to absorb legal or compensation costs in the event of a liability claim.

• Example: In the Oriental Insurance VS Babu (2021) case, the insurer deducted part of the hospitalization reimbursement without proper explanation. The Consumer Forum ordered full payment along with compensation. The policyholder—a small business owner—was able to recover crucial funds that supported continued operations.
• Insight: According to the Allianz Risk Barometer (2023), delays in claim settlements over 60 days can reduce an SME’s operational capacity by up to 27% due to liquidity strain.

2. Avoidance of Business Disruption & Delays in Expansion

When claims are not paid on time, businesses often postpone critical activities such as expansion, hiring, or investment in infrastructure.

• Case: A Health Insurance policyholder faced delays in receiving reimbursement for a typhoid hospitalization claim worth ₹1 lakh. Due to the wait, the family business had to postpone hiring and incurred additional loan interest. The case was resolved only after Ombudsman intervention.
• Global Parallel: The UK restaurant chain Burger & Lobster was caught in a legal battle over COVID-19 business interruption insurance. Due to unsettled claims (worth over £735 million across affected businesses), many outlets faced temporary closure and lost leases.

3. Impact on Customer Trust and Retention

Customers often equate fast and fair insurance settlements with responsible business practices. When businesses suffer negative publicity or legal delays, their brand image and client retention take a hit.

• Indian Insight: A study published in the Indian Journal of Applied Research showed that 71% of Indian claimants felt that delayed settlements negatively affected their financial planning and reduced their trust in insurers.

4. Reduction in Legal & Operational Costs

Timely settlement of grievances reduces the burden of litigation, which often involves court fees, lawyer charges, and operational downtime due to hearings.

• Case Reference: In the Whiten v. Pilot Insurance Co (Canada), the Supreme Court awarded CAD $1 million in punitive damages due to unjust claim denial. Had the insurer acted promptly, they could have avoided reputational damage and legal penalties.

Conclusion

In the intricate fabric of the insurance industry, grievance redressal is more than a post-sale function—it is the thread that holds the entire promise together. When businesses take out public liability insurance, they are not merely safeguarding finances; they are placing trust in a system that is meant to stand by them when they are most vulnerable. This paper has journeyed through the historical evolution of liability insurance, examined the structure of complaints, decoded the causes, and highlighted the immense business and financial value of resolving these grievances promptly.

We have seen, through data and real-world stories, that timely redressal is not just operationally efficient—it is transformational. It enables small businesses to survive slips, setbacks, and legal challenges without collapsing under the weight of uncertainty. It restores working capital, renews customer faith, and, above all, reinforces the dignity of the insured. The analysis clearly shows that insurers who resolve complaints swiftly and fairly are not only protecting clients—they are investing in their own profitability. Low repudiation rates, high renewal ratios, and strong customer retention are not coincidences; they are the natural outcomes of a customer-first grievance strategy.

If insurance is the business of trust, then grievance redressal is the moment that trust is tested. And when that test is met with empathy, speed, and fairness, something remarkable happens: a transactional contract becomes a lasting relationship. A liability policy becomes a growth partner. And an insurer becomes more than a provider—it becomes a protector.

That speed and sensitivity in grievance resolution are not just best practices—they are the soul of modern insurance. And in getting them right, the industry doesn’t just protect businesses—it powers them forward.

If trust is the currency of insurance, then timely grievance redressal is the mint that prints it.

Authored By:

Naina Garg

PGDM graduate in Insurance Business Management (Batch 2023–25) from Birla Institute of Management Technology