Cost Effective Dispute Resolution in Insurance Outside Litigation

By Dr. Wickrema WEERASOORIA

After nearly five years in office, I can categorically state as the Insurance Ombudsman, that as an Alternative Dispute Resolution Mechanism, this scheme has been a great success. There are several reasons for this success.

Firstly, the insurance industry has fully supported this scheme. From the CEO downward, the executives who come for my inquiries at my office have been sympathetic to claims. While they have steadfastly stood by their own terms, they have also realized that unless the insurers help the Ombudsman, the scheme will collapse.

Whenever, after my inquiry I have felt that the complainant should be given some relief, the insurance companies have acquiesced and not said 'NO' just to prove that they were always right in rejecting the claim earlier. On the other hand, as the Ombudsman, I have also always maintained the fundamental principles of insurance. For example, that non-disclosure of material facts is a serious matter justifying a rejection of the total claim. Some policy holders say that it was the Agent who filled up the proposal form who suggested that the non-disclosure will not be a problem. On such occasions, I tell the insured, that it is not the Agent who is buying the policy. Also it is not the Agent who signs the proposal form !

The Ombudsman Scheme is also very cost effective. We have a small office. I have my small office in the larger building in which the Financial Ombudsman operates. By having a room in this larger office we have cut down cost of rentals. I also have only one Secretary who works efficiently and attend to all the work. A normal office would have about five to six staff. All this goes to cost saving.

We also do not charge policy holders any fee for processing their complaints. The fact that the Ombudsman service is totally free has its disadvantages because some people come with frivolous or belated complaints. So we have to be discerning.

No one will contest my statement that resorting to litigation in a insurance or banking dispute is not worth the trouble, the delay and the money that will have to be spent. It is not possible for the average citizen to take on and fight an insurance company. The only beneficiaries of litigation are the lawyers. I advise people to avoid litigation and do my best to get at least an ex-gratia payment where the insurance company has lawfully rejected the claim.