Need to incorporate an Insurance Ombudsman

The office of Ombudsman in Sri Lanka has not been created by an Act of Parliament or by any other enabling legislation. The object of this article is to suggest incorporation of Insurance Ombudsman either by an Act of Parliament or by an addition to amendment to the Regulation of Insurance Industry Act, No. 43 of 2000.

This is in no way a reflection on the incumbent as Insurance Ombudsman. Dr Wickrema Weerasooriya does a splendid job as an impartial and independent person whose views and decisions are not only appreciated by the insurance industry and the policyholders but also implemented to the letter. He is eminently qualified for the ost and has been (and is now too in some restricted manner) not only a lecturer at the Sri Lanka Law College, the Institute of Chartered Accountants, the Post Graduate Institute of Management (PIM), and the Institute of Bankers, but also Associate Professor of Law at Australia’s prestigious Monash University.

But my candid view is that the office of Insurance Ombudsman is not personal to him. It is the Insurance Association of Sri Lanka that, (a) created the post of insurance ombudsman, (b) appointed Dr Wickrema Weerasuria to the post with the concurrence of the Insurance Board of Sri Lanka, (c) inducted him on January 20, 2005 by the IASL at the office of the IBSL in the presence of Chairman of the IBSL, and (d) allocated a sum of money contributed by the insurance companies for the upkeep and maintenance of the office of the Insurance Ombudsman though the IBSL too made a contribution of Rs. 1 million in 2005 towards the upkeep of the Insurance Ombudsman

The only snag we have noticed is that the statement made by Dr Weerasooria in a TV interview on June 12, 2007. He said that the Ombudsman is an independent authority not depending upon the emoluments from the insurance companies in Sri Lanka. But it is in fact the case.

What he should have said was that though he gets remuneration from the IASL to which insurance companies make their individual contributions, he acts as an independent body without prejudice. Be that as it may, the appointment of an Insurance Ombudsman by an association that, among other things, looks after the interests of insurance companies does not seem to be a good proposition.

My point is further proved when the Insurance Ombudsman asked for more funds for its office, at which the Insurance Association of Sri Lanka, of which the present writer was a member at that time, deliberated upon it and increased the quantum of funds in 2006.

The Insurance Ombudsman is vested with the task of solving any disputes arising between insurance companies and policyholders and dealing with the duties to streamline the insurance sector in Sri Lanka. The upper limit of the value of a claim referred to and decided upon by Ombudsman is Rs. 500,000 and the decision of Ombudsman is binding. The services rendered by the Insurance Ombudsman are exemplary having cordial relationships with insurance companies, the IBSL and the members of the public who are policy-holders of insurance policies. Its website www.insuranceombudsman.lk is very informative and does contain the views of Dr Wickrema Weerasooria’s personal experiences as well. As per its website, the Sri Lanka Insurance Ombudsman scheme is fundamentally based on schemes successfully operating in other countries like India, England, Australia and New Zealand.

The Insurance Ombudsman scheme is also modelled on the Financial Ombudsman Scheme in Sri Lanka which was established in December 2003. With the concurrence of the Central Bank of Sri Lanka and as part of the Financial Sector Reforms, a voluntary scheme entitled “The Financial Ombudsman, Sri Lanka” has been established by the Banking industry, the registered Finance Companies, the Primary Dealers and Leasing Companies that are supervised by the Central Bank. The Financial Ombudsman has the power to inquire into and settle any complaints and disputes between individual customers and the financial institutions covered by the Ombudsman Scheme.

The financial institutions that are voluntarily participating in this scheme are only those regulated and supervised by the Central Bank of Sri Lanka.

The objective of the Sri Lanka Insurance Ombudsman scheme is the satisfactory settlement of complaints/disputes that policyholders of insurance companies (the insured) may have against the company that sold them the insurance policy (the insurer).

Prior to the Insurance Ombudsman Scheme coming into operation, each participating insurance institution/company has established and nominated in each of their institutions a senior and experienced officer designated as the “Complaints Settlement Officer” or “Complaints Resolution Officer” (or similar name).

Initially, any customer or policyholder of any participating insurance institution can file a complaint to the Ombudsman on any of the following grounds in respect of General Insurance or Long-term Insurance service:

(a) Non-settlement or delay in the settlement of a claim Inequitable or unjust interpretation or application of the terms and conditions of the insurance policy with regard to the following: (i) Claims including maturities of long-term insurance policies, (ii) Premium payable and Premium refunds, and (iii) Other benefits payable in terms of the insurance policy.

(b) Any other relevant matters that may be specified or referred to the Ombudsman by the IBSL or the Consumer Affairs Authority of Sri Lanka (CAASL).

(d) Complaints by registered/licensed Insurance Brokers against Insurance Companies and vice versa. Also complaints relating to Insurance Agents working for Insurance Institutions.

(e) Complaints relating to the violation of directives of the IBSL in relation to insurance services. Complaints directed to the Ombudsman for investigation, settlement and/or report by the Consumer Affairs Authority under the Consumer Affairs Authority Act No. 9 of 2003.

It is a requirement that before a policyholder submits a complaint to the Insurance Ombudsman, he/she should contact the insurance company and attempt to settle the dispute. However, the Ombudsman’s office would not reject a complaint only on the ground that the complainant has not attempted to settle the claim with the insurer before coming to the Ombudsman.

The Ombudsman’s period of office is for a term of two years with eligibility for re-appointment. Since he was inducted on January 20, 2005, his term of office has been extended for another two years.

In fact, the post of the Insurance Ombudsman should have been created by an Act of Parliament for not only giving him the legal clout but also safeguarding his independence and integrity, the line of argument I am taking. To say the least, the post of Insurance Ombudsman should have been created by the IBSL either by an administrative fiat or by an amendment to the RIIA. Otherwise, this could have been done by an Act of Parliament.

Dr Weerasooria, being a professional expert in law and practice and a person of integrity and respect, does have the charismatic ability to command respect not only from the insurance companies but also from the members of the public in general.

Therefore, he would not give in to the pressure of and influence from the insurance companies and he is able to function independently. Nevertheless, the post of Ombudsman is not personal to him.