Insurance Ombudsman (Amendment) Rules, 2021

MINISTRY OF FINANCE
(Department of Financial Services)
New Delhi

NOTIFICATION

Dated: 2nd March, 2021

G.S.R. 147(E).- Whereas, certain draft rules, namely, the Insurance Ombudsman (Amendment) Rules, 2020, were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated 22nd December, 2020 under the notification of the Government of India in the Ministry of Finance (Department of Financial Services) number G.S.R. 788 (E), dated the 22nd December, 2020, inviting objections or suggestions from persons likely to be affected thereby before the expiry of a period of forty-five days from the date on which the copies of the Official Gazette containing the said notification were made available to the public;

And whereas, copies of the said Official Gazette were made available to the public on the 22nd December 2020;

And whereas, the objections and suggestions received from the public on the said draft rules have been considered by the Central Government.

Now, therefore, in exercise of the powers conferred by section 24 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Central Government hereby makes the following rules further to amend the Insurance Ombudsman Rules, 2017 (hereinafter referred to as the said rules), namely:-

1. (1) These rules may be called the Insurance Ombudsman (Amendment) Rules, 2021.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Insurance Ombudsman Rules, 2017,-

(i) for the letters “IRDAI” wherever they occur, the word “Authority” shall be substituted;
(ii) for the words “Executive Council of Insurers” wherever they occur, the word “Council for Insurance Ombudsmen” shall be substituted.

3. In rule 4 of the said rules, in sub-rule (1),-

(i) for clause (d), the following clause shall be substituted, namely:-

“(d) “Council for Insurance Ombudsmen” means the Council for Insurance Ombudsmen constituted under rule 5;‘

(ii) in clause (e), for the word “established”, the word “appointed” shall be substituted;

(iii) clause (f) shall be omitted;

(iv) after clause (k), the following clause shall be inserted, namely:-

“(l) “insurance broker” means a person who has been granted a certificate of registration as an insurance broker by the Authority;‘.

4. In rule 5 of the said rules, in sub-rule (2), in clause (v), for the word “Director”, the words “Joint Secretary or equivalent” shall be substituted.

5. For rule 7 of the said rules, the following rules shall be substituted, namely:-

“7. Selection Committee for appointment of Insurance Ombudsman.-

(1) The Council for Insurance Ombudsmen shall appoint such number of Insurance Ombudsman for such territorial jurisdiction as the Council for Insurance Ombudsmen may specify, for discharging the duties and functions under these rules.

(2) The Insurance Ombudsman shall be appointed by the Council for Insurance Ombudsmen on the recommendations of the Selection Committee consisting of the following members, namely:-

(a) the Chairperson of the Authority, or such other whole-time member of the Authority entrusted with matters relating to the general or life insurance business as the Chairperson may authorise  chairperson;

(b) one individual drawn from amongst the non-official members of the Banks Board Bureau possessing necessary expertise and experience in matters relating to general insurance business member;

(c) one individual drawn from amongst the non-official members of the Banks Board Bureau possessing necessary expertise and experience in matters relating to life insurance business – member;

(d) one individual with a track record of promoting consumer rights or advancing the cause of consumer protection in the insurance sector – member; and

(e) the representative of the Central Government referred to in clause (v) of sub-rule (2) of rule 5 – member.

Explanation.- In this sub-rule, the expression “Banks Board Bureau” means the autonomous body named as such, set up by the Central Government for selection of whole-time directors of public sector insurance companies.

(3) Where there is vacancy in the office of the non-official member referred to in clause (b) or clause (c) of sub-rule (2), the Central Government may nominate another individual eligible to be such non-official member in matters referred to in the said clauses to be a member of the Selection Committee.

(4) The Council for Insurance Ombudsmen shall invite applications by advertisement for selection of Insurance Ombudsman and such advertisement shall be issued in respect of each vacancy existing in the office of the Insurance Ombudsman at the beginning of a calendar year including any vacancy likely to arise in that calendar year.

7A. Qualification for appointment of Insurance Ombudsman.- A person shall not be qualified for appointment as Insurance Ombudsman, unless he-

(i) is not less than fifty-five years but not exceeding sixty-five years of age as on the last date specified for receipt of application in the advertisement;

(ii) is, or has been, a member of an all-India service or a civil service of the Union and has held a post of Joint Secretary or equivalent to the Government of India; or

(iii) has served for at least twenty-five years in the insurance industry and has held a post not less than one level below that of a director of a board.

7B. Procedure and selection criteria for appointment of Insurance Ombudsman.-

(1) The Council for Insurance Ombudsmen shall shortlist up to five candidates from each category of applicants specified in clauses (ii) and (iii) of rule 7A, for each vacancy from amongst eligible applicants, reckoned on the basis of the length of service of the applicants in their respective category:

Provided that where the number of candidates to be shortlisted exceeds the number specified under this rule, on account of two or more candidates having the same length of service, all candidates with such length shall be included in the shortlist.

Explanation.- For the purposes of this rule, the length of service, in respect of an applicant-

(i) who is serving as or has served as a member of an all-India service or a civil service of the Union, shall be reckoned from the date of his first appointment as Joint Secretary to the Government of India or equivalent thereof in the Central Government; and

(ii) who has served in the insurance industry, shall be reckoned from the date of his first appointment to a position either immediately below the level of a director of a board in the insurance industry or at the level of a director of a board, whichever is earlier.

(2) Each shortlisted candidate shall furnish the following particulars, in such manner and form as the Council for Insurance Ombudsmen may specify, namely:-

(a) a declaration and undertaking that he shall ensure absence of conflict of interest in the discharge of functions and duties of Insurance Ombudsman; and

(b) information in respect of-

(i) personal identification details, including income-tax Permanent Account Number, bank account numbers and Director Identification Number;
(ii) professional history, including directorships;
(iii) disclosure regarding criminal prosecution, if any;
(iv) the financial interests, including beneficial ownership, of the candidate and his relatives;
(v) organisational affiliations;
(vi) disclosure regarding the candidate or his relatives-

(A) being a promoter or director or employee of,
(B) having material pecuniary relationship with,
(C) being an employee or proprietor or partner in a firm of auditors, company secretaries or cost accountants of, or in a legal or consulting firm having material transactions with, and
(D) being chief executive or director of any non-profit organisation that has material receipts from, an insurer or its holding, subsidiary or associate company;

(vii) disclosure regarding the candidate or his relatives holding shares in excess of two percent. in, or being a material supplier, service provider or customer of, or being a lessor or lessee of, an insurer.

(3) The Council for Insurance Ombudsmen shall convey to the Authority, the particulars under sub-rule (2) for its opinion as to the applicant‘s suitability, integrity and absence of conflict of interest, keeping in view the information conveyed and such other information as it may consider relevant.

(4) After considering the opinion of the Authority under sub-rule (3), the particulars of the candidates referred to in sub-rule (2) shall be laid before the selection committee which shall take into account the suitability of the candidates including as to absence of conflict of interest and finalise the process of shortlisting of candidates for interaction.

(5) In respect of candidates figuring in the shortlist finalised by the selection committee under sub-rule (4) who are public servants or officials falling within the scope of the powers and functions of the Central Vigilance Commission established under the Central Vigilance Commission Act, 2003 (45 of 2003), the Council for Insurance Ombudsmen shall obtain the vigilance clearance through the Ministry of Finance, Department of Financial Services.

(6) In respect of candidates figuring in the shortlist finalised by the selection committee under sub-rule (4) who are other than those referred to in sub-rule (5), the Council for Insurance Ombudsmen shall furnish the information referred to in sub-rule (2) to the Directorates of Enforcement, Revenue Intelligence and Goods and Service Tax Intelligence, and the Central Board of Direct Taxes for their reports on any inquiry or investigation or proceeding instituted against such candidate.

(7) The selection committee shall, after giving an opportunity for interaction to all the candidates shortlisted by it under sub-rule (4), recommend to the Council for Insurance Ombudsmen a candidate for appointment against each vacancy in the office of Insurance Ombudsman, along with up to two additional candidates in order of preference as reserve candidates.

(8) The Council for Insurance Ombudsmen shall, after considering the recommendations of the selection committee under sub-rule (7), appoint the recommended candidate as Insurance Ombudsman unless-

(i) the vigilance clearance required under sub-rule (5) has not been received, or
(ii) the Council for Insurance Ombudsmen is of the opinion that the nature of the inputs is such that it would not be in public interest that he be so appointed, and in such a case, the Council for Insurance Ombudsmen may consider a reserve candidate, in accordance with the order of preference, for appointment.

(9) The Council for Insurance Ombudsmen, after considering of the suitability of the candidates, shall appoint a candidate as an Insurance Ombudsman:

Provided that if the appointed candidate does not assume office or, after assuming office at any time during the same calendar year, either resigns his office or is removed therefrom, or dies, then the Council for Insurance Ombudsmen may appoint the reserve candidate referred to in sub-rule (7), in accordance with the order of preference, after ascertaining his willingness.”.

6. For rule 8 of the said rules, the following rule shall be substituted, namely:-

“8. Term of office of Insurance Ombudsman.- An Insurance Ombudsman shall hold office for a term of three years or till he attains the age of sixty-eight years, whichever is earlier, and shall not be eligible for reappointment:

Provided that every Insurance Ombudsman holding office as such as on the 2nd day of March, 2021, may continue to hold office for the term specified at the time of his appointment or till he attains the age of seventy years, whichever is earlier.”.

7. In rule 9 of the said rules, after the words “gross misconduct during the term of office,”, the words “or physical
incapacity, or unsoundness of mind, or insolvency, or conviction for an offence involving moral turpitude, or
engagement in any other paid employment, or conflict of interest or furnishing as part of the selection process
information that is false or omits to specify material facts,” shall be inserted.

8. In rule 11 of the said rules, after sub-rule (3), the following sub-rule shall be inserted, namely:-

“(4) Notwithstanding anything contained in sub-rules (1) and (2), where there is a vacancy in an office of Insurance Ombudsman having territorial jurisdiction as specified by the Council for Insurance Ombudsmen under sub-rule (1), the Council for Insurance Ombudsmen may, if it is satisfied that it is necessary in public interest so to do, by order, authorise any other Ombudsman to discharge the functions of such office in addition to his area of jurisdiction for a period not exceeding six months or till the vacancy is filled or till the expiry of his term of office as Ombudsman, whichever is earliest.”.

9. In rule 13 of the said rules, in sub-rule (1),-

(a) for the words “or disputes relating to- “, the words “alleging deficiency in performance required of an insurer (including its agents and intermediaries) or an insurance broker, on any of the following grounds:- ” shall be substituted;

(b) for clause (i), the following clause shall be substituted, namely:-

“(i) any other matter arising from non-observance of or non-adherence to the provisions of any regulations made by the Authority with regard to protection of policyholders‘ interests or otherwise, or of any circular, guideline or instruction issued by the Authority, or of the terms and conditions of the policy contract, insofar as such matter relates to issues referred to in clauses (a) to (h).”;

(c) the following explanation shall be inserted, namely:-

“Explanation.– For the purpose of this sub-rule, the term “deficiency” shall have the meaning as assigned to it in clause (11) of section 2 of the Consumer Protection Act, 2019 (35 of 2019).”.

10. In rule 14 of the said rules,-

(i) in sub-rule (1),-

(a) after the words “an insurer”, the words “or insurance broker” shall be inserted;
(b) after the words “the insurer”, the words “or the insurance broker, as the case may be,” shall be inserted;

(ii) in sub-rule (2), for the word “signed”, the words “signed or made by way of electronic mail or online through the website of the Council for Insurance Ombudsmen,” shall be substituted;

(iii) in sub-rule (3),-

(A) after the word “insurer”, wherever it occurs, the words “or insurance broker, as the case may be,” shall be inserted;

(B) in clause (a), for the words “makes a written representation”, the words “has made a representation in writing or through electronic mail or online through website of the insurer or insurance broker concerned” shall be substituted;

(iv) in sub-rule (4), after the word “insurer”, the words “or insurance broker, as the case may be,” shall be inserted;

(v) after sub-rule (5), the following sub-rule shall be inserted, namely:-

“(6) The Council for Insurance Ombudsmen shall develop a complaints management system, which shall include an online platform developed for the purpose of online submission and tracking of the status of complaints made under rule 14.”.

11. In rule 15 of the said rules,-

(i) in sub-rule (2), after the word “insurer”, the words “or insurance broker, as the case may be,” shall be inserted;

(ii) after sub-rule (4), the following sub-rule shall be inserted, namely:-

“(5) The Ombudsman may, on his own or on the request of the complainant, hear a matter through video-conference if he is satisfied that circumstances so require, after notifying the complainant and the insurer or insurance broker concerned, subject to guidelines issued by the Council for Insurance Ombudsmen in this regard and published on its website:

Provided that the Ombudsman may allow the insurer (including its agents and intermediaries) or insurance broker, as the case may be, to be heard through video-conference.”

12. In rule 16 of the said rules, after the word “insurer”, wherever it occurs, the words “or insurance broker, as the
case may be,” shall be inserted.

13. In rule 17 of the said rules,-

(i) in sub-rule (5), after the word “insurer”, the words “or insurance broker, as the case may be,” shall be
inserted;

(ii) in sub-rule (6),-

(A) after the word “insurer”, the words “or insurance broker, as the case may be,” shall be inserted;

(B) after the words “the Ombudsman”, the words “and upload the details in the complaints management system” shall be inserted;

(iii) in sub-rule (8), after the word “insurers”, the words “or insurance brokers, as the case may be,” shall be inserted.

[F. No. 14019/02/2019-Ins.II]
SAURABH MISHRA, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),
dated the 27th April, 2017, vide notification number G.S.R. 413 (E), dated the 25th April, 2017 and were
subsequently amended by notification number G.S.R. 785(E), dated the 17th August, 2018.