The Ministry of Finance (Department of Financial Services) has released a draft notification on 25 November 2025, proposing amendments to the Insurance Ombudsman Rules, 2017. Published under G.S.R. 864(E), these draft rules are intended to strengthen the grievance redressal framework in India’s insurance sector and make the system more transparent, accountable, and citizen-friendly.
The draft rules are open for public consultation for 45 days, during which stakeholders can submit objections or suggestions to the Secretary, Department of Financial Services, New Delhi. Post this period, the Central Government will finalize and notify the amended rules in the Official Gazette.
Key Highlights of the Proposed Amendments
1. Renaming and Terminology
The draft rules clarify terminology across the board:
- The term “Ombudsman” is now replaced with “Insurance Ombudsman” wherever it appears.
- References to complaint handling now explicitly mention complaints “made under rules 13 and 14 for policies”, ensuring clarity about the type of grievances under the Ombudsman’s jurisdiction.
- In addition, the term “agents and intermediaries” now includes insurance brokers, reflecting the expanded ecosystem of intermediaries in insurance.
2. Strengthened Structure and Eligibility
The amendments redefine the structure and eligibility criteria for Insurance Ombudsmen:
- Eligibility: Candidates must have 25 years of experience in the insurance sector, holding a position at least one level below director, or have served IRDAI at Executive Director level or above.
- Appointment Process: The Council for Insurance Ombudsmen now has clear guidelines for appointing Ombudsmen, including filling vacancies temporarily by assigning an Ombudsman from another jurisdiction.
- Reposting and Resignation: Ombudsmen can request a change of posting once during their tenure, with the Council’s decision being final. Resignation requires 90 days’ notice or payment of three months’ salary in lieu.
3. Introduction of Appellate Authority
A major addition is the creation of an Appellate Authority under IRDAI:
- The Authority will hear appeals against awards of the Insurance Ombudsman.
- It will consist of two members, including one domain expert, appointed through a transparent process.
- Members will have a three-year term, with no reappointment.
- Appeals can be made within 30 days, and the Authority will pass orders within three months, ensuring timely resolution.
4. Enhanced Complaint Handling
The amendments focus on speed, transparency, and digital enablement:
- Complaints must be registered within one working day of receipt.
- Ombudsmen can conduct hearings via video conferencing, making grievance redressal more accessible.
- Awards and recommendations can now include penalties for insurers or brokers who act arbitrarily or fail to comply.
- An online complaints management system will track submission, status, mediation, and appeal processes, including Aadhaar-enabled authentication where necessary.
5. Financial and Administrative Clarity
The draft rules provide clarity on budgeting and administrative responsibilities:
- Funds for salaries, allowances, and other expenses of Ombudsmen, Appellate Authority, and staff will be borne by the Insurance Councils.
- The Council for Insurance Ombudsmen will allocate resources based on workload and number of awards passed, promoting efficiency and accountability.
6. Advisory Committee
An Advisory Committee comprising eminent members, including a nominee of the Central Government, will periodically review the performance of Ombudsmen and the Appellate Authority, ensuring oversight and governance.
Why This Matters
These reforms aim to make insurance grievance redressal faster, fairer, and digitally enabled, while strengthening accountability mechanisms for insurers, brokers, and intermediaries. By introducing an appellate mechanism and clear guidelines for appointment, tenure, and removal of officials, the amendments are expected to enhance public confidence in the insurance ecosystem.
With digital grievance platforms, clear timelines, and penalties for non-compliance, India moves closer to a robust, citizen-friendly insurance redressal framework.