Insurance watchdog IRDA will set up a centralised grievance redressal mechanism to ensure that the problems of customers in the life and non-life sectors are addressed in a time-bound manner.

"The Authority is in the process of developing the new Integrated Grievance Management System (IGMS) which will...facilitate policyholders to register or track their complaints online with insurance companies...," the Insurance Regulatory and Development Authority (IRDA) has said in a letter to all insurers.

The new IGMS, when implemented, would help IRDA to monitor the grievance redressal procedure set up by the insurance companies, vis-a-vis the complaints.

"The system involves mirroring of the grievance database of insurers in a central repository created for the said purpose," the letter added.

To implement this, the regulator has asked the insurance companies to set up infrastructure which would be compliant with the said grievance settlement procedure.

"All insurers are directed to nominate professionals from their IT team and Grievance cell by September 8, 2010, who would be responsible for ... successful completion of the integration requirement," IRDA said.

In the interest of policyholders, IRDA had made it mandatory for insurance companies from August 1 to respond to the grievances of customers within two weeks or face penal action.

"An insurer shall send a written acknowledgement to a complainant within three working days of the receipt of the grievance...where the grievance is not resolved within three working days, an insurer shall resolve the grievance within two weeks of its receipt and send a final letter of resolution," IRDA had said.

In the recent letter to all insurers, IRDA had asked the insurance companies to modify their grievance management system "to incorporate the uniform input form to be specified by the Authority.