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The Insurance Regulatory and Development Authority of India (IRDAI) has issued the draft Internal Insurance Ombudsman Guidelines, 2025, on Wednesday, July 24, 2025. Under these proposed rules, insurance companies will be required to appoint an Internal Ombudsman to handle claim-related complaints up to ₹50 lakh.

Goal: Faster and Fair Complaint Resolution

The initiative aims to establish a more independent and transparent grievance redressal mechanism within insurance companies. This move is expected to speed up the resolution of rising or pending complaints while ensuring fairness. The guidelines will be applicable to all insurers (except reinsurance companies) that have been in operation for over three years.

Appointment and Role of the Ombudsman

• Mandatory Appointment – Every eligible insurer must appoint at least one Internal Ombudsman.

• Regional Requirement – Additional Ombudsmen may be appointed for different regions to ensure faster processing of complaints.

• Reporting Structure –

  • Administrative matters: Reports to the MD or CEO of the company.

  • Functional matters: Reports directly to the Board or the Policyholder Protection & Grievance Committee.

This dual reporting system is designed to maintain the Ombudsman’s independence and improve oversight. By resolving disputes internally, companies can reduce the need for policyholders to approach external Ombudsman offices or courts, thus strengthening trust in the insurance sector.

Key Provisions in the Draft Guidelines

The draft specifies:

• Eligibility and qualifications for the Ombudsman.

• Tenure and remuneration details.

• Clearly defined duties and responsibilities.

Public Feedback Invited

IRDAI has invited comments and suggestions from the public until 5:00 PM on August 17, 2025. The full draft is available on the IRDAI official website.

Part of a Larger Reform Plan

These proposed guidelines are a part of IRDAI’s broader strategy to:

• Reduce the time taken for dispute resolution.

• Ensure better protection for policyholders.

• Enhance accountability within insurance companies.

By implementing this system, IRDAI aims to make the complaints process faster, fairer, and more transparent, benefiting both policyholders and the insurance industry.