The Department of Financial Service under Ministry of Finance has issued an exposure draft for comments on November 25, 2025 Insurance Ombudsman to amend its previously notified Insurance Ombudsman Rules, 2017.
While taking into account the nuances faced in implementation of 2017 Rules, the following are the key changes enshrined in the draft rules.
1. Establishment of Appellate Tribunal
As currently the process involves registration of complaint by policyholder to the Insurer & in case of no or unsatisfactory response from the part of Insurer within the stipulated period i.e 30 days, the Policyholder has the option to move to Ombudsman within 1 year from date of rejection/repudiation/partial settlement of claim by the Insurer/Insurance Broker.
In the aforementioned case the award by the Ombudsman is binding on both the party.
Here by the virtue of establishing appellate authority, the ombudsman award shall not be conclusively binding as the either party reserves a right to appeal to the appellate authority within 30 days of receipt of award.
The Appellate tribunal shall make order within 3 months of receipt of appeal.
2. Penalty for Consequential loss and Mental harassment
This is newly added in the draft rules with reference to provision on :-
- consequential loss for penalty to 100% of award amount subject to capped at 20 lakhs rupees &
- upto 1 lakh rupees for mental harassment
3. Procedural & Compliance Process
- The office of Ombudsman shall register every complaint within one working day.
- If a case is settled through mediation, the insurer along with complying recommendation upload details to complaint management system within 15 days.
- The definition of Group insurance is broadened to take into ambit the government schemes implemented through insurance companies.
5. Accelerated Reporting
The deadline for Insurance Ombudsman to submit their annual reports has been moved up from June 30th to May 15th. Consequently, the Council's general review for the Central Government and IRDAI must now be completed by June 30th (previously September 30th)
Electronic Consent: Consent for mediation can now be recorded electronically through the online platform, removing the strict requirement for physical written consent.
Regulatory References
