In India’s evolving insurance landscape, disputes between policyholders and insurers remain an inevitable reality, despite digital transformation and improved customer experiences. According to IRDAI data, over 40,000 complaints were addressed through the Insurance Ombudsman offices in recent years, many of which stemmed from lapses in policy servicing, claim settlement delays, or miscommunication.

This emphasises a crucial need for insurers, particularly insurtech firms aiming for innovation, to comprehend both the nature of these disputes and ways to minimize them. The insurance ombudsman remains a vital mechanism in resolving such conflicts swiftly, cost-effectively, and fairly. For forward-looking organisations, recognising these recurring issues is key to streamlining operations and improving customer retention.

The Insurance Ombudsman: A Quick Overview

The insurance ombudsman in India was established by the Government to provide an independent, neutral platform for resolving policyholder grievances without litigation. It offers redress for individual complaints up to ₹50 lakh, covering sectors such as life, health, and general insurance.

For insurtech companies and traditional insurers alike, understanding the scope of the ombudsman’s intervention can lead to better internal complaint resolution mechanisms. The following are the disputes handled by the Ombudsman in India –

1. Claim Rejections and Delays

One of the most common disputes brought before the insurance ombudsman is the denial or delay in the settlement of claims. Insurtech companies, while benefiting from automation and AI-driven claim processes, must remain cautious about unintended exclusions and algorithmic errors that may trigger consumer backlash.

These may arise due to:

• Disputed causes of loss
• Alleged non-disclosure of material facts
• Ambiguity in policy wording
• Misinterpretation of terms by either party

2. Mis-selling and Policy Servicing Issues

Another recurring category includes complaints related to mis-selling or incorrect documentation. For digitally enabled insurers, this highlights the importance of user-centric design and clear onboarding communications. The insurance ombudsman often intervenes when policyholders claim they were not adequately informed during purchase. These typically involve:

• Selling of inappropriate products
• Lack of transparency in policy benefits
• Incorrect policy documentation or issuance

3. Disputes Around Renewal and Lapsed Policies

Policy lapse and renewal disputes also constitute a significant chunk of grievances. Common issues include:

• Denial of renewal without a valid reason
• Lapsed policies due to non-intimation
• Grievances regarding premium payment errors

Insurtech companies, which are better known for their automation, must ensure that renewal alerts, reminders, and payment systems are fail-safe. The insurance ombudsman has repeatedly ruled in favour of policyholders when systems fail to provide due notification.

4. Partial Settlements and Deduction Disputes

Policyholders often approach the insurance ombudsman regarding partial claims, especially in the health and motor insurance segments. This calls for insurers to ensure transparency in policy inclusions and exclusions, ideally through simplified digital summaries. For insurtech companies, it is an opportunity to lead the industry in reducing claim ambiguity.

These disputes generally arise due to:

• Ambiguous policy clauses
• Lack of clarity in what constitutes ‘reasonable and customary’ charges
• Disallowance of certain treatments or procedures

5. Non-Issuance or Delayed Issuance of Policy

Despite digital infrastructure, complaints relating to non-receipt of policy documents or delays in issuance remain a surprisingly frequent issue. Often, the lack of immediate digital access or system errors results in disputes that land at the ombudsman’s desk. This reflects the need for robust backend integration and real-time document delivery, especially for tech-driven insurers.

The Role of Insurtech in Reducing Disputes

As the insurance industry embraces AI, machine learning, and big data, insurtech companies have a unique opportunity and responsibility to reduce the friction that leads to disputes. Leveraging data analytics for fraud detection, automating policy matching, and deploying chatbots for early grievance redressal are just some of the ways to pre-empt conflict.

However, automation without empathy can lead to oversights. The insurance ombudsman continues to uphold consumer interests in an increasingly digitised system, reminding the industry that trust, clarity, and fairness cannot be compromised.

Conclusion

In an industry built on trust, recurring disputes, however small, can damage long-term reputation. For insurers and insurtech companies, understanding the patterns of complaints handled by the insurance ombudsman offers valuable insight into operational gaps and customer pain points. Proactive resolution, transparent communication, and tech-enabled oversight are not just desirable; they are now non-negotiable.

Also Read: Insurance Fraud: Are You Protected?