THE 1,000 people who wrote or telephoned with a complaint to the Office of the Insurance Ombudsman last year provided firm proof if any were needed of the importance of the office in arbitrating disputes over motor, home, travel, life, pension and health policies. Even more encouraging is that the Ombudsman was able to adjudicate in over three quarters of the 635 written cases, the largest number of eligible cases dealt with since the scheme was set up five years ago. Yet there are still too many complaints - 159, or 25 per cent - which fall outside the Ombudsman's terms of reference. Nearly all deal with the two most contentious issues which have dogged the industry over the same period the encashment and surrender values of life assurance investment funds and the role of brokers in the sale of such policies.

Not only do these complaints remain too high (a quarter in 1996, a third in 1995), but the industry remains just as stubborn in its refusal to allow the Ombudsman the freedom to address them. Instead, she must quote her terms of reference to the complainant and refer those which deal with brokers to the Irish Brokers Association (which has, at least, agreed to report back on any outcome).

The Ombudsman, Ms Paulyn Marrinan Quinn, described her office at the launch of the most recent annual report, as a forum of redress for complaints, rather than as a regulatory watch dog for the industry. Yet she is understandably sensitive to criticism that her brief is too narrow and was made deliberately so by her industry funders in order not to deal with the contentious encashment and intermediary issues.

In the 1996 annual report she stresses that while the office is strictly independent of the board which set it up and is answerable only to the independent Ombudsman's Council, the question of perceived independence is one which needs to be monitored.

The success of the Ombudsman's Office as a highly professional agency is not in doubt, but its quasi regulatory status, to use the Ombudsman's own description, highlights, the glaring inadequacy of an industry for which there is no independent form of complaint or regulation.

Because it is, staffed by non industry, officials, (albeit paid indirectly by the insurance companies against which complaints are lodged) the Ombudsman's Office has become the only place policyholders believe they can turn to for a fair hearing of their case.

Ms Marrinan Quinn has a well deserved reputation for diligence as well as compassion, and notes in the annual reports that she has had to remind the industry on more than one occasion that policyholders also happen to be human beings. Her rulings have contributed to improving the painfully laboured process of getting the insurance companies to produce more readable policy documents, more efficient customer service departments and more efficient claims' offices.

With such a solid record of success in settling a wide range of disputes, the justification for not including complaints against fund values and intermediaries in the Ombudsman's terms of reference are wearing very thin.

It really isn't good enough anymore to say that the legal position of brokers precludes them from being part of the Ombudsman's scheme, when it is patently obvious (from policy documentation) that the broker's work is paid for by the insurance company in the form of a commission.

Since the insurance contract is taken out with the insurance company, not the broker, the moral and legal onus is surely on the company to require that a broker involved in a dispute participate in an industry sponsored adjudication scheme.

Similarly, with user friendly software systems now available to anyone interested in a comprehensive breakdown of fund performances and values, could not the Ombudsman's Office act as the `honest broker' in disputes between customers and insurance companies over investment payouts. If more technical know how is needed, the Ombudsman could source it from any number of independent actuarial consultants.

By refusing to widen the Ombudsman's brief, the insurance companies are doing nothing to improve consumer confidence, and ironically, are probably contributing to something they wish to avoid: the setting up of a proper, statutory regulator for the industry.