“Jiyo Befiqar” — the tagline of one of India’s 30 general insurance companies — aptly describes the role insurance has played since its inception. Back in 1688, what started off as a concept to indemnify the financial losses of shippers, merchants and cargo owners from marine perils, dacoits, and theft, is now become a more ubiquitous part of our daily lives. Right from multi-billiondollar corporate deals to an athlete’s foot, insurance is being widely used to mitigate uncertainty. Although the penetration of insurance in India stands at 3.69%1 (just shy of half of the global average which stands at 6.19%2), this figure is only expected to grow in the times to come owning to increasing awareness, sectoral boost by the government, increase of FDI to 100% for insurance intermediaries, emergence of new cross-selling channels such as bancassurance, online and NBFCs, and digitization and innovation of products. Undoubtedly this gives a reason for insurance companies to smile, but simultaneously also entails the responsibility of putting in place a faster claim disbursal process, robust fraud-prevention system, and an efficient dispute resolution mechanism, among other things. Keeping aside the former two points for time being, this article talks about insurance disputes and existing mechanisms to resolve them, and later dives into a 21st-century solution which provides aggrieved party the opportunity of resolving disputes from the comfort of their homes and offices, and that too within 45 days!
Disputes are inevitable – and this fact is no different for the insurance sector too. Non-payment of claims on technical grounds and dissatisfaction with company procedures are the most common grievances which exist. To effectively dispose them off, the Insurance Regulatory and Development Authority of India (“IRDAI”) together with the companies have set up a three-tier grievance redressal system. Let us understand them:
1. Company-level: Every insured who has a grievance has to mandatorily approach the complaints/grievance redressal cell of the concerned insurer as the first step. If they do not receive a response from the insurer within a reasonable period of time or are dissatisfied with the response of the company, they may register their grievance with IRDAI.
2. IRDAI-level: If unsuccessful or dissatisfied with the insurer’s internal grievance redressal system, aggrieved insured can register their complaint on IRDAI’s Integrated Grievance Management System. Post registration, IRDAI forwards the complaint to the concerned insurer. A pre-defined time of 15 days is given for satisfactory resolution, failing which the insured has the option of escalating and sending the complaint for reexamination or approaching the Insurance Ombudsman/ civil court/consumer forum.
3. Ombudsman-level: Insurance Ombudsman are appointed by the Governing Body (IRDAI in this case) and are empowered to entertain complaints. The insured always has the remedy of approaching the Insurance Ombudsman in case the dispute remains unresolved or is unsatisfactorily dealt with. He has to lodge the complaint with the Insurance Ombudsman under whose territorial jurisdiction the insurer’s office falls. The pecuniary limit for the amount under dispute which the Ombudsman can entertain is Rs. 30 lakhs.
In addition to this, the aggrieved can always knock the doors of traditional dispute resolution forums, namely civil court, and consumer court. That would however mean countless visits to court, lakhs of rupees spent on advocate fees (sometimes even more than the disputed amount!), and an air of uncertainty over when the dispute will meet its end (and will it be in favour!?). Suddenly, a dispute over the thing whose function was to eradicate worries of uncertain events in the first place, becomes the most worrisome thing of our life. Does there exist an efficient approach of dealing with this? In a world where a majority of things can be done by a mouse click, can insurance disputes be resolved in a similar fashion? The answer to this is affirmative and lies within the increasingly-popular concept – Online Dispute Resolution (“ODR”)
ODR is a term which is used quite often in the West. It has existed in the legal dictionary (and in foreign land) for a long time but is gaining traction in India only now – thanks to the pandemic. It is the use of technology to resolve disputes between people or businesses using various out-of-court mechanisms (which is popularly known as ‘Alternative Dispute Resolution’, or ‘ADR’). Yes, there are techniques and methods recognized by law (eg. arbitration, conciliation, mediation, etc.) that assist in resolving disputes without the involvement of courts. When blended with technology, these mechanisms provide a convenient, costeffective, time-saving, and efficient way to amicably settle conflicts.
Although in its nascent stage, ODR in India has been used by different domains within the country for speedy redressal of grievances / disputes. Here are some precedents:
1. Online Consumer Mediation Centre (“OCMC”): Started as a pilot project by the Ministry of Consumer Affairs, Government of India, this platform specifically deals with the resolution of e-commerce consumer disputes. OCMC aims to provide a state-of-the-art infrastructure for resolving consumer disputes through in-person and online mediation.
2. RTI Online: The Department of Personnel & Training, Government of India, has built a portal (https:// rtionline.gov.in/) for filing Right to Information applications and first appeals online in respect of ministries, departments and other public authorities of the central government.
3. MahaRERA Conciliation and Dispute Resolution Forum: With a view to facilitate amicable conciliation of disputes between promoters and allottees, the Maharashtra Real Estate Regulatory Authority (“MahaRERA”) set up the MahaRERA Conciliation and Dispute Resolution Forum.
From an insurance perspective, ODR can cater to disputes related to delay in claim settlement, repudiation of claim, company procedures, premium paid or payable in terms of policy, legal construction of the policies in so far as such disputes relate to claims, and policy servicing related grievances against insurers and their agents and intermediaries. ODR has the potential to be an effective tool to amicably settle disputes pertaining to own damage and third party in motor accident cases, low-value travel insurance related disputes, and even disputes arising from high quantum marine insurance policies, among others.
Bhaven Shah is a lawyer (GLC’09), a chartered accountant and founder of legal tech firm Presolv 360. Srinath Sridharan has been a board member strategic counsel for nearly two decades with leading corporates across diverse sectors, including automobile, e-commerce, advertising, realty, and financial services.
