Federal Insurance Ombudsman's Institution: Its role and impact on insurance industry

The insurance sector in Pakistan, until end of year 2000, was under the regulatory purview of the Federal Ministry of Commerce, Government of Pakistan when a new insurance law was introduced in 2000 by repealing previous insurance act 1938. The new law, the Insurance Ordinance 2000 came inforce with the prime objective of protection of the policyholders' interests and to promote sound development of the insurance industry. Under the Ordinance, the regulatory and supervisory responsibilities of the insurance sector were shifted from the Ministry of Commerce to the Securities and Exchange Commission of Pakistan (SECP) in 2001.
Later in May 2006, the institution of the Federal Insurance Ombudsman was established under the Ordinance to deal with the complaints filed against the insurance companies by their policy holders. The institution of Federal Insurance Ombudsman is one of the four forums available to the policy holder under the Insurance Ordinance 2000 for redressal of their grievances against the insurers. But this institution emerged as most successful among all mainly due to its role in redressing grievances between insured and insurers in an amicable manner by resorting to mediation and byproviding timely and inexpensive justice to the aggrieved party. The Institution further strengthened after proclamation of the Federal Ombudsmen Institutional Reforms Act 2013 which gives the contempt of court powers to this institution, aiding in execution of its Orders.
The institution of Federal Insurance Ombudsman is an autonomous national dispute resolution body which independently and impartially resolves insurance disputes, between policyholders and insurance companies. It is of immense importance as it protects the policy holders' interests and also builds their confidence in the system. A problem solving approach together with inexpensive justice and timely solution of the disputes without any unnecessary delayrenders the Institution capable enough to serve the purpose including streamlining the channels of modus operandi to deliver, creating public awareness and nourishing a sense of responsibility in the insurance industry. Hundred of complaints against the insurance industry are lodged with the Institution every year, most of which are resolved in the same calendar year without having the complainant to shell out even a single penny in terms of fee or any other legal expense. Provision of justice at door steps of the complainants within 60 days' time is something which could have only been achieved through an autonomous institution without any political influence and by avoiding cumber some and lengthy procedures for seeking justice. Speedy, cost free and transparent complaint resolving approach and procedure helps both the parties [insurer and policyholder] involved in the affairs, in resolving their issues through alternative dispute resolution mechanism.
From a statistical perspective, the numbers of complaints resolved by the Institution since its establishment are surely far higher than matters disposed off by any other relevant forums, which helped the insurance industry in several ways; firstly, frivolous complaints get quashed without involving them in time taking legal proceedings and their money, secondly, resolution of policy holders' grievances built a sense of confidence in the general public to get their lives, properties, businesses, etc insured without fear. Besides; it promulgated a sense of responsibility in the officials dealing with sales/ operational part of insurance business to avoid malpractices from the very beginning, which could end up in litigation and they could be held responsible at a later stage. It does not require a great deal of imagination that the complex litigation process involving attorneys' fees, lengthy court trials, time taking evidence procedures ends up in years of legal proceedings, which is neither beneficial for the policy holders nor for the insurance industry in terms of money and time both.
The insurance business is perhaps the most difficult one of the whole financial service sector to establish and build up due to its typical elements like intangibility, transience and uncertainty which render it a redoubtable task. Hence the insurance business has to combat all the tribulations spawned by general illiteracy, massive poverty, wide-ranging ignorance, joblessness, unenviable laws & order and not the least population bursting at seams.
Notwithstanding the difficulties in the overall working environment the insurance industry could do well in setting its own house in order. The industry as a whole as witnessed from an appropriate space suffers from the acute dearth of properly qualified staff ranging from underwriting to claims management. Having the right people is vital especially within claims as it impacts firmly upon people. The industry needs to create good infrastructure in this regard. The most prominent need seems to be that of an industry-wide recognition of the importance of raising customer service standard and treating customers fairly.
Keeping in view the costs in terms of time, finance and reputation which the insurance industry is to bear while responding to the complaints made at this office and other judicial forums, the industry would do better contemplate holding seminars and interactive workshop in order to apprehend the factors giving rise to the grievances inherent in coping with claim matters especially.
The complaints lodged with this office and their resolution, disposal as per law may serve as guiding standard for the just clearance of the claims by the insurance companies.
To be precise the raison d'etre of this office after all may be taken in the broader perspectives of serving both sides: the insured and the insurer as well. To former by redressing his grievance and to latter by raising its standard, boosting its confidence so that it could serve the public at large, upholding the principle of equity, fairplay, justice and morality.
(The writer is Insurance Analyst)
Details of insurance claims paid by insurance companies by the order of Honorable Federal Insurance Ombudsman in the last three months

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S.No.  Complainant        Amount Involved (Rs.)

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1      Ms. Rehmat Bibi                  451,500

2      Mr. Waseem Bari                  600,000

3      M/s Gac Pakistan Ltd             537,218

4      Mr. Muhammad Ashraf              180,550

5      Mr. Muhammad Younis              150,000

6      Mr. Sultan Abbas                 500,000

7      M/s Bilal Jewllers             2,323,000

8      Mr. Qamar Shehzad                250,000

9      Mr. Jawad Hasnain                113,053

10     Mr. Ghulam Asghar Soomro         255,000

11     Mr. Ghulam Akbar Soomro          245,399

12     Ms. Kaweeta Bai                1,172,632

13     Mr. Shamsur Rehman               500,000

14     M/s Victory Pipe Ltd          30,000,000

15     Mr. Farhan Tanveer               300,000

16     Mr. Chand Khan                   200,000

17     Dr. Shagufta Qaiser              100,000

18     Dr. Bashir Ahmed                 101,778

19     Mr. Rizwan Umar Farooq           207,060

20     Mr. Muhammad Masoom              950,000

21     Dr. Muhammad Ali                 300,000

22     Mr. Asif Majeed Subhani          200,000

23     Mr. Aftab Ahmed                  500,000

24     M/s Green Corp Limited           154,240

25     Mr. Irfan Malik                2,050,000

26     Syed Qaiser Abbas Naqvi          427,446

27     Syed Raza Ali Gilani           6,500,000

28     Mst. Shamim Akhtar               270,000

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Total                                49,538,876

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