Express Tribune Interview Of Muhammad Raeesuddin Paracha Federal Insurance Ombudsman

Q: Tell us about yourself and the challenges that you have faced & how has been your journey so far?

I am a civil servant and I joined service in 1982 through the public service commission. During my tenure in the federal government, I served as a Secretary to the Government of Pakistan as well as with some key institutions like StateLife Corporation and other federal government bodies.In 2015, I joined as the Federal Insurance Ombudsman Pakistan when this organization was in its infancy; and the number of annually registered complaints wasmuch lowerin comparison to the quantum of complaints that actually existedagainst the maladministration of the insurance companies. With a proactive public information campaign I was able to boost up the public awareness and confidence which led to a progressive increase in the institution of grievances.

Q: What is the vision & mission of Federal Insurance Ombudsman?

The vision of federal insurance ombudsman is to provide expeditious,cost-free &hassle-free relief to the people by addressing their grievances against Insurance Companies operating in Pakistan and to promote good governance therein. Our stated mission is to diagnose, investigate, redress and rectify any injustice being done to a person; which must be done in fair and transparent manner and within the given timelines.

Q: What is the role of Insurance Ombudsman?

The role of Federal Insurance Ombudsman is to investigate complaints or grievances between the insurer and the insured and mediate fair settlements.This Forum is here to protect the people against violation of their rights, misuse of power, unfair decisions and maladministration of the insurance companies. The Ombudsman plays an increasingly important role in improving public administration and governance while making the government's actions more open and its administration more accountable to the public. The insurance ombudsman’s role begins when a policy holder is aggrieved from any of the actions of the insurance company which includes non-payment of death claim or any monetary damages claim. The complaint could be on account of a monetary loss or demand of extra-charges of premium by the Insurance Companies. Almost 25,000 to 30,000 claims are rejected every year by all insurance companies- be it life insurance or general insurance.

Q: How does Federal Insurance Ombudsman help people?

Federal Ombudsman performs several tasks such as it examines complaints from citizens about how the managementof insurance companiesacts and functions. We make recommendations on compensations of monetary loss suffered by a Policy Holder, or in case of death his legal heirs, caused by maladministration of Insurance Companies. Moreover, we offer the policyholders or their beneficiaries a speedy and cost-free way in resolving their grievances caused by the insurance companies. And at the same time,it’s highly effective way of providing justice within only 60 to 90 daysas compared to the other forumsof similar nature.

Q: What kind of cases or complaints does this Forum handle?

The insurance can be divided into 2 major types, life insurance & general insurance. General insurance refers to the insurance, which are not covered under life insurance and includes various types of insurance, i.e. fire, marine, motor, businessetc.Life insurance, as the name suggests, is insurance plan that covers the risk of contingencies that can affect human life and pays out the sum assured to the nominee on the death of the insured, or to the insured on the expiry of the definite term.We also handle cases of health insurance & travel insurance.

Q: Which institutions can we complain against in theFederal Insurance Ombudsman?

Mostly against the insurance companies,provided they have committed anything wrong against any Policy holder.

Q: Can Federal Insurance Ombudsman begin any investigation against anyone on its own?

Investigation can only be done if a complaint is registered by a complainant. We can do research & we can make recommendations to the regulatory body SECP forinstitutional improvement of the insurance companies by way of suggesting better procedures,or in case of banks to the State Bank of Pakistan.

Q: What kind of challenges & difficulties is the insurance industry facing?

The insurance industry in Pakistan, even after more than 70 years of existence, remains largely underdeveloped as its contribution to the GDP is below 1 percent - in a time when regional players, such as Indian and Bangladeshi insurers, have managed to achieve a growth of almost 2 to 3 percent. One reason why insurance business has not penetrated deeply in Pakistani environment is that it is largely perceived as a business which is antithesis to Islamic beliefs generally held by people. Although, insurance companies have come a long way trying to neutralize this notion and have somewhat succeeded in convincing a few, but still a large number of people are not ready to accept this very offer.The Islamic insurance, widely known as Takaful has been in the market for quite a while now, but has failed to penetrate deep in the market as lack of proper marketing has resulted in ignorance of the product amongst the masses. There is a trust deficit between the insurance companies & the masses. Unless that trust deficit is bridged,the promotion of insurance in Pakistan will remain a difficult task. But we also hope that public should consider insurance companies as partners of their odd times.

Q: Do you record complaints of overseas Pakistanis too?

Yes,we recordsuch complaints, and they can reach us through email, but when the hearing is due, they are required to nominate somebody in their place if they can’t come in person.

Q: Which insurance sector accounts for the most reported complaints?

We have more complaints from the life insurance sector than from general insurance; the percentage is around 60 to 70.The reason for it is that in life insurance, the claimants are less privileged people who could not afford personal attorneys to look after their daily affairs. In contrast, in case of general insurance the contract is between two companies having their in house attorneys/law offices who could take up the dispute to other forums like courts. The claimants under life insurance after hearing that there is a forum where they can fight for their rights without any cost or legalcomplication, file their complaint with us. And as far as general insurance is concerned, we receive complaints regarding motor insurances, crop insurance, marine insurance etc. The main challenge for us as an institution is the lack of public awareness but still the number of complaints in all sectors of insurance is significantly growing.

Q: What suggestions would you like to make to the government regarding insurance industry & policies?

My foremost suggestion is that the people should first make themselvesaware and must go through all the contents and have proper understanding of terms & conditionsbefore consenting for any insurance policy. Because in many cases it happens that people do notunderstand what insurance is & they just fall in the trap due to persuasion by bankers etc.Bankers have hefty commissions in selling these policies hence, people should be careful about that.

What is the difference between a Court andan Ombudsman Forum?

The Ombudsman is a quasi-judicial forum. We decide the cases on the basis of documentary evidence, we examine the documents produced by both the parties—the complainant & the company. On the basis of those documents & personal hearing we decide the matter on facts and merit of the case. We have no power to compel the attendance of witnesses, or take evidence on oath or test evidence by cross-examination. On the other hand,the courts cross-examine the witnesses and the complainant has to attend the court proceedings, and only thereafter the court reaches the final decision. The procedures of the courts are lengthy and costly. The courts may take years for deciding about any complaint, while we resolve it within just 2 to 3 months timeframe. Additionally, when it comes to courts, people also have to bear fees of the lawyers and the entire procedure is quite expensive and time consuming.

How much time does ombudsman take for resolving any case?

We decide the case within 60 days timeframe. But sometimes, there are exceptional cases where parties delay the procedure and hence it may occasionally take a few more days. We don’t entertain such cases that have already been filed elsewhere or are pending in some court of law.

What kinds of maladministration are the most common in the insurance companies?

People often forget the fact that insurance companies are there to make profit and hence overstep at times to save themselves from paying claims. In the concealment patterns, we have observed that the insured party usually doesn't have a part in filling-in the insurance form. The Agents often take the signature from potential clients on blank forms and fill in the details later. Being a contract of good faith medical examination (in life insurance policies) is discretion of insurers who conduct medical examination prior to policy issuance under high risk policies. And then information given in application forms is made the reason for non-disclosure or concealment at the time of the death claim because the form is signed by the policyholders but in actually a very small percentage of policyholders fill the form themselves. However, we are trying to educate public regarding this issue through public information campaigns in the leading newspapers and media by using other ways to send a message that their rights are not unprotected anymore.