Final Recommendations of the Law Commission for the Grievance Redressal

Mechanism

The following are the final recommendations of the Law Commission with respect to the Grievance
Redressal Mechanism:
1. Adjudicating Officers or Investigating Officers shall be appointed by the IRDA to adjudicate or
investigate violations with respect to Act, Rules, and Regulations by the insurers, insurance
intermediaries, or insurance agents and levy penalties as provided in the Act. Any person
aggrieved by the decision of the Adjudicating or Investigating Officers can appeal to the IAT.
2. Every insurance company will set up an in-house grievance redressal mechanism under the overall
supervision by the IRDA. It is incumbent for every person seeking to file a claim before the
Grievance Redressal Authorities (GRA) to first approach the in-house mechanism. When the
decision of the in-house mechanism is not satisfactory to the claimant or when no decision is given
within a period of 60 days from the date of making such claim to the in-house mechanism, it is
open to the claimant to approach the GRA within a period of 60 days from the date of receipt of the
decision of the in-house mechanism and on the expiry of 60 days after the claim is made,
whichever is later.
3. The GRA will replace the present system of having the ombudsmen, under the 1998 Rules, at the
major metropolises. The GRA will be a statutory authority exercising statutory functions. It will not
exercise any jurisdiction in relation to the levy of fines and penalties in relation to the offences
under the Act.
4. The jurisdiction of the GRA will be to hear the following:
• Disputes between the insured and the insurer that pertain to personal lines of insurance on
the following matters:
• Partial or total repudiation of claims by an insurer
• Dispute with respect to premium paid or payable in terms of the policy
• Dispute on the legal construction of the policies and claims
• Delay in settlement of claims
• Non-issue of insurance documents to customers after receiving premium
• Complaints against an insurer
• Dispute between the insurer and the intermediaries
• Dispute between insurers
• Dispute between the assignees of a policy with respect to priority of the assignment
5. The GRA should be geographically dispersed as widely as possible. For instance, there may be
GRAs in every major city of the country. This is necessary, given the large number of

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policy-holders at present and with the prospect of this number growing in the future. There may be more
than one GRA in a state, depending on the number of cases in that state.

6. The powers and jurisdiction of the GRA will include all the powers and functions of the civil court
and would involve adjudication of issues of fact and law.
7. In addition to the above, all pending disputes arising under the Insurance Act, 1938 before the
Consumer Forum, will be transferred to the GRAs for disposal, in accordance with the provisions of
the Insurance Act, 1938. To this extent, an amendment may have to be made in the Consumer
Protection Act, 1986 to provide that disputes arising under the Insurance Act, 1938 will not be
entertained under the Consumer Protection Act, 1986.
8. There will be a clause expressly excluding the jurisdiction of the civil courts and other tribunals and
forums regarding matters that form the subject-matter of the jurisdiction of the GRA. Every claimant
before the GRA has to express declaration stating that no similar claim has been made before any
other forum or tribunal, and further that the claimant has availed the in-house mechanism of the
insurer as indicated in para (2) above.
9. With a view to encourage Alternate Dispute Resolution (ADR) by way of mediation or conciliation,
a claimant may be provided with the choice to opt for mediation or conciliation. In such a case, the
GRA will refer the dispute for mediation or conciliation by a person or body agreed upon, or when
there is no agreement, by a person or body nominated by the GRA from a panel prepared by it.
Further, the GRA may itself refer the pending dispute before it to an ADR process at any stage of
the proceedings, with the consent of the parties.
10. The decision of the GRA or the final decision on appeal will be enforceable by the GRA, which
pass the initial order, and for that purpose the GRA will exercise all the powers of a civil court.
11. The GRA should be a multi-member body comprising one judicial member who will be the
president and two other technical members. All the members of the GRA will hold office till the age
of 65 years. The president of the GRA should be a retired Judicial Officer not below the rank of a
senior Civil Judge or a lawyer with not less than 20 years of experience, nominated in consultation
with the Chief Justice of the High Court.
12. With respect to the appointment of the technical members to the GRA, consultation with the Chief
Justice of the High Court is not necessary. The Central Government prepares a panel with the
names of persons not less than 15 years of experience in the insurance industry and sends it to a
Selection Committee comprising the members of the Insurance Councils constituted under Section
64C of the Act. The Selection Committee will recommend the names from the panel of technical
members to be appointed to the GRA. The Central Government will make rules in relation to the
salaries and allowances, and other terms and conditions of service of the president and members
of the GRA.
13. The GRA will formulate rules of procedure to cover matters related to filing of claims, completion of
pleadings, and evidence on affidavits or otherwise, passing of awards, and furnishing copies.
These rules of procedure will also deal with matters relating to enforcement of the decisions of the
GRA as finally determined in the appeals there from.
14. The president or members of the GRA shall not be removed from office except by an order made
by the President on ground of proved misbehaviour or incapacity. An enquiry regarding this should
be made by a Judge of the High Court. The president or member at fault should be informed of the
charges against him. Also, he should be given a reasonable opportunity of being heard with
respect to those charges. The Central Government will make rules to regulate the procedure for
the investigation of misbehaviour or incapacity of the president and members of the GRA.

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15. An appeal will lie from the decision of the GRA to an IAT. The jurisdiction will extend to hear the
following:
• Appeals from the GRA
• Appeals against the orders passed by the Adjudicating or Investigating Officers appointed
by the IRDA
• Appeal against any order passed by the IRDA. With the constitution of the IAT, the
appellate authority constituted by a notification of the Central Government will have to be
wound up and the appeals pending before it will stand automatically transferred to the IAT
• Making interim orders, conditional or otherwise, in relation to the abovementioned matters
16. The IAT should be a multi-member body of a judicial member as the president and two technical
members. The IAT should be presided over by a retired High Court Judge nominated in
consultation with the Chief Justice of India. A certain degree of transparency should be induced in
the process of selection of such members. The appointments of technical members to the IAT
should also be done in consultation with the Chief Justice of India. For this purpose, the Insurance
Councils (constituted under Section 64C of the Act) should send a panel with names of persons,
not less than 20 years of experience in the insurance industry to the Chief Justice of India. The
names of the technical members will be chosen with the concurrence of the Chief Justice of India.
The Central Government will make rules in relation to the salaries and allowances, and other terms
and conditions of service of the president and members of the IAT.
17. The retirement age for the president and members of the IAT is 68 years. The removal of the
president and the members of the IAT for proven misbehaviour or incapacity is done after an
enquiry by a judge of the Supreme Court of India in which such president or member has been
informed of the charges against him and given a reasonable opportunity of being heard with
respect to those charges. The Central Government makes rules to regulate the procedure for the
investigation of misbehaviour or incapacity of the president and members of the IAT.
18. The Principal Bench of the IAT should be in New Delhi. It is preferable that there is one IAT in
every state. However, there can be one IAT for one or more states as may be decided by the
Central Government, or by the agreement between State Governments on the pattern of Section
4(3) of the Administrative Tribunals Act, 1985.
19. The IAT will formulate rules of procedure to cover matters related to filing of appeals, completion of
pleadings, making of orders both interim and final, and furnishing copies.
20. The expenditure for the constitution of the GRAs, the IATs and their maintenance must be borne
by the Central Government so that they can judge disputes arising under a central statute.

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21. There will be a further statutory appeal to the Supreme Court from the decision of the IAT. The
appeal will have to be filed within 60 days of decision of the IAT.
22. There should be an adjudication fee levied with respect to a claim before the GRA and an appeal
before the IAT. However, any individual policy-holder may show sufficient cause and get
exemption by the GRA or the IAT, from paying such adjudication fee.