If a recent conference organised by the insurance regulator in Hyderabad is any indication, insurers will now come under considerable pressure to improve their consumer grievance redress machinery.

The Insurance Regulatory and Development Authority’s (IRDA) Regulation on the Protection of Policy Holders’ Interests, 2002, mandate that insurers put in place an “effective” grievance redress system. But the increasing number of complaints against insurers filed by consumers in different fora show that the system that the insurers offer is anything but effective.

Under the Consumer Protection Act, 2.7 million cases have been filed by consumers so far (from the time of constitution of the consumer courts till October 2006). Out of this, complaints against insurance companies form the biggest chunk. Problems with insurance companies also dominate the calls received by the toll-free national consumer helpline. During May 2005-May 2006, the helpline got 1,780 calls pertaining to insurance companies. In addition, the complaints before the Insurance Ombudsman and the Consumer Grievance Cell set up by IRDA show clearly the consumer dissatisfaction with the grievance redress system provided by insurers. Of the complaints that IRDA receives, 48 per cent pertain to health insurance and 25 per cent to motor insurance.

The regulator has already constituted a committee to (a) look into the existing grievance redress system provided by insurers and suggest steps to make it more effective and (b) review the Regulation on the Protection of Policy Holders’ Interests and suggest modifications to make it more effective. Once the Committee submits its report, IRDA is planning to tighten the regulation through an amendment and ensure its strict compliance.

Meanwhile, the conference, organised jointly by IRDA and the Institute of Insurance and Risk Management, also put into perspective the steps needed to be taken by companies to effectively service policy holders and address their grievances. In fact, the speakers at the conference called for attitudinal change and said it was not enough to set up a grievance redress machinery, but that it should function impartially, independently and should have adequate powers to do so. The companies should also spell out their commitment to the policy holders through charters that spell out quality standards in respect of servicing of the policy and these should be strictly adhered to, reviewed and audited at the board level.

All these developments are sure to send a warning bell to insurers to pull up their socks and improve their grievance redress machinery.