Insurance: Scope of Mediation and Suggestions

Let me start with a quote by the Father of the Nation:

I realized that the true function of a lawyer was to unite parties given as under. The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromise of hundreds of cases. I lost nothing thereby not even money; certainly not my soul.

-MAHATMA GANDHI

Mediation as a concept, is not alien to Indian Culture and this is evident from writings/ studies undertaken in the subject that dates back to existence of it (mediation) in Vedic India when it was used to help resolve disputes. References to Mediation as a method to resolve issues is also found in the Mahabharata and the Ramayana and was used by both Lord Krishna and Hanuman. Buddhism encouraged mediation and Buddha himself said “better than a thousand hollow words is one word that gives peace”.

Similarly in the post Vedic era, the tribunals called the KULA, SHRENI, and PUGA were established which used mediation as dispute resolution mechanism which based its decisions on the principles of justice, equity and good conscience. Pre -colonial rule also witnessed the use of this dispute resolution mechanism by the Kings and the Panchayats. However, with the advent of the Colonial Rule, Courts established by British on the lines then prevalent in their home land came to replace the traditional and the more amicable method of dispute resolution with, the adversarial system of dispute resolution. The legacy of the British continues in India to this day as the most used option of dispute resolution resorted to by most Parties looking to resolve matters. This despite, all its shortcomings that far exceed its efficacy coupled with its inability to deliver justice much less timely justice.

Its apparent that, a need for an alternative dispute resolution mechanism was felt and expressed from time to time but we, as part of the legal fraternity , have done little to popularise it   for a good number of reasons which may range from fear of being perceived as a failure as a lawyer in the adversarial system with little or no capability in the legal arena to one mouthing the views of the idealistic academician, fear in most of us of losing a healthy flow of clientele should we recommend mediation as an option to the adversarial legal system, our faith in the adversarial system for fear to accept change and what it might bring with it, to our lack of faith in exploring a system that may just be an answer to the prayers of most disputants and let’s not forget that the lack of mediation being promoted by some of   most of our legal luminaries while in office as Judges, often perceived as a less structured system etc. These are some of the points that comes to mind at this juncture.

Often when a dispute of a complicated nature appears in the course of work in the corporate world, most organizations and / or their external counsels when they do consider alternatives before them to, resolution of a dispute may look at going down the litigation or the arbitration route when talks break down between Parties but, rarely do they look at mediation as an option/ alternative to explore . Having been an in- house counsel for over thirteen years, mediation was never an option I considered at any one point in time during my tenure.

Coming to the issue on hand, disputes in insurance segment, the question we need to ask is what should a party do if he opts to use Mediation to resolve a dispute with an insurance organization. We have in place what is called the Insurance Regulatory and Development Authority (IRDA). The Government of India, in exercise of powers under the provisions of Insurance Act, 1938 framed “Redressal of Public Grievances Rules, 1998“, which came into force with effect from 11th November, 1998. To enable the implementation of the Rules, the Institution of Insurance Ombudsman was established and is functioning since 1999.
New print poster

 

The Ombudsman functions within a given geographical jurisdiction with offices 17 cities across India and can entertain disputes relating to partial/total repudiation of claims, delay in settlement of claims, any dispute on the legal construction of the policies in so far as such disputes relate to claims, disputes regarding premium paid or payable in terms of the policy and non-issuance of insurance documents.

The complaint is to be filed within one year of the rejection by the insurer of the   representation of the complainant or the Insurer’s final reply to the representation. The complaint is to be in writing and may be lodged by the individual or through post / fax / email followed by a hard copy. The complaint can be filed directly with the Ombudsman without engaging the services of a lawyer. Complaints can be lodged against any Insurer both in the Public Sector and Private Sector in both Life and Non-Life sectors. The maximum limit for the amount under dispute for which the Ombudsman can entertain a complaint is up to Rs.20 lakhs. No such complaint will be entertained if the dispute is already pending before a consumer forum or a court.

Should both Parties agree for mediation, the Ombudsman shall give his Recommendation within 1 month? The Recommendation of the Insurance Ombudsman is both subject to acceptance by the complainant in full and final settlement of the complaint. If such acceptance is not agreeable, the complainant may exercise the right to take recourse to the normal process of law against the insurance company. Further, dismissal of a complaint by the Insurance Ombudsman does not vitiate the complainants’ right to seek legal remedy against the insurers complained against, as per normal process of law.

The proceedings before the Ombudsman is informal in nature. The hearing of both parties will be conducted should the ombudsman consider it necessary. Hearings may be conducted outside headquarters, where warranted.

The services of the Ombudsman is completely free of costs.

What becomes apparent are the advantages of using the mediation as an alternate dispute resolution mechanism to that of litigation.

We should seriously consider popularising mediation as an alternative to litigation/ arbitration/ conciliation as a better approach to settlement of a dispute for various reasons- it being cost effective, the recommendation is given within a month of filing the complaint, the confidentiality of issues is maintained, it gives a chance to the parties to be heard in the matter and have a say in the settlement of the dispute and should they be dissatisfied with the recommendation, they will always have the option to use other methods of dispute resolution should mediation fail.

We should also look to   other countries to fine tune the process of mediation in the insurance segment and adopt best practices to make and popularize mediation as a recommended option to be used in dispute resolution.

ABOUT THE AUTHOR

DSC01021Rohini Boez has successfully completed the IICA 40 hours training program on commercial mediation and negotiation. She is a partner at Boazz Law Chambers. She mainly handles their media & entertainment and information technology practice. She is an experienced and highly regarded practitioner in this area of practice, which covers transactional work, contentious issues and enforcement in IP/IT cases, with a special interest in the software and entertainment space. For the past twelve years (2003-2015) she was an in-house Counsel with leading MNC’s in the entertainment and software industries. Having spent many years as an in-house corporate counsel in the hi-tech industry, she brings a different perspective and flavour to practice and in her approach to advising clients. She is a practising Advocate and is enrolled at the Bar Council of Maharashtra and Goa.

 

For more information on the 40 hours training program on commercial mediation and negotiation by IICA, Ministry of Corporate Affairs, visit mediationiica.in or email us at mediation.iica@gmail.com

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