IRDAI Rules & Grievance Redressal

If the insurer will not fix a problem, the Insurance Ombudsman can. It can award up to ₹50 lakh. The award binds the insurer. The insurer then has 30 days to pay. That ceiling was raised to ₹50 lakh on 9 November 2023.

What are your rights as a policyholder, and by when?

How does the free-look period work?

Regulation 20(1) gives 30 days on every life policy. It also covers every new individual health policy. Policies that run for under a year are left out. The 30 days run from the day you receive the policy.

You do not need a good reason. Regulation 20(3) asks only two things. You must have made no claim. And you must state your reasons. Regulation 20(4) then says the refund follows “irrespective of the reasons mentioned”.

The refund is not always the full premium. The insurer may deduct three things. A risk premium for the days you were covered. The cost of any medical test. And the stamp duty.

Unit-linked plans work differently. The insurer buys back the units at the NAV on the day you cancel. So a falling market in those 30 days is your loss, not theirs.

Use this window. It is the only cheap way to undo a mis-sold endowment plan or ULIP. Read the benefit illustration in those 30 days. Do that above all if the plan was sold to you as savings. Our term insurance comparison shows why such plans fail on both cover and returns.

Why nomination is not optional any more

Regulation 18(1)(i) is blunt. No life proposal can be accepted unless nomination is obtained. That flows from section 39 of the Insurance Act. General and health insurers must also take a nomination. They must do it at issue and again at each renewal, under regulation 18(2).

Two fee rules matter here. No fee can be charged to register a nominee when you buy. A change or cancellation cannot cost more than ₹100 each time. If an agent quotes more, that is a breach.

Update the nominee after any life event. A name set a decade ago is a common cause of family disputes. Marriage and divorce are the usual triggers.

How do you complain about an insurer, step by step?

The ladder has three rungs. You cannot skip one.

First, the insurer. Regulation 25 makes every insurer run a grievance system in each office. It must also publicise it. Complain in writing or by email. Keep the acknowledgement. Every later step rests on that record.

Second, IRDAI. Register the grievance with the regulator if the insurer stalls. It puts a supervised record on the insurer’s file.

Third, the Ombudsman. Rule 14(3) sets the gate. You must have written to the insurer first. Then one of three things must have happened. The insurer rejected you. Or it did not reply within one month. Or the reply did not satisfy you. Rule 14(4) lets the Ombudsman excuse a delay for reasons it records.

What can the Insurance Ombudsman actually do?

Rule 13(1) lists the grounds. Delay in settling a claim. “Any partial or total repudiation of claims.” Disputes over premium. Misrepresented policy terms. Poor policy servicing. And a policy issued that does not match your proposal form.

The numbers sit in rule 17. The Ombudsman must pass an award within three months. That runs from the date it gets everything it asked for. It cannot award more than your real loss. And it cannot award more than ₹50 lakh, including expenses. The insurer must then comply within 30 days. Rule 17(8) makes the award binding on the insurer.

Note what that does not say. It does not bind you. Reject the award and you keep your court remedy. The reverse is not true. Rule 14(5) blocks the Ombudsman if the same matter is already in a court, a consumer forum or arbitration. So go to the Ombudsman first. Then to court, never the other way round.

It also costs you nothing. Rule 12(2) puts the cost of the whole scheme on the Life Insurance Council and the General Insurance Council. There is no filing fee for you. You do not need a lawyer. That makes it the most under-used remedy in Indian insurance. Disputes over room rent limits and waiting periods for pre-existing disease are exactly what it is for.

Before you buy, check how the insurer behaves on claims. Our data on health claim settlement is a better guide than a brochure.