Expedite efforts to trace claimants to unpaid policies: IRDAI tells insurers
The Hindu
IRDAI urges insurers to trace unclaimed policyholders, update KYC, and engage with e-commerce portals for consumer tracing.
Concerned over mounting unclaimed amounts of policyholders with the insurers, regulator IRDAI wants insurance companies to redouble efforts in tracing the rightful claimants, including roping in e-commerce portals to locate them, if required.
“Engage with credit bureaus, account aggregators, common service centre/POS, e-commerce portals for tracing [such] consumers,” the Insurance Regulatory and Development Authority of India said, prescribing measures for insurers to reduce existing unclaimed amounts and to contain future accumulations.
From prompting policyholders to update their details such as mobile number, e-mail and address, to urging insurers to update KYC (know your customer) on an ongoing basis as well as re-KYC of minors on their becoming majors, the regulator wants agents, intermediaries, group master policyholders and other distribution channels to also be made accountable. “Make accountable the respective agents, intermediaries... involved in the solicitation for tracing of consumers and update the contact details, bank account details etc.,” it said, making a few amendments to its November 2020 master circular on the unclaimed amounts.
The time frame available to insurers has been increased under one of the modifications. In its latest circular, IRDAI said unclaimed amounts would mean any amount held by an insurer and payable to consumers, including income accrued, remaining unpaid beyond 12 months from due date as against six months stipulated in the 2020 circular.
Discussion with insurers disclosed that one of the reasons for the rise in unclaimed amounts is cases of consumers being not traceable. There were other reasons too, behind insurers not being in a position to pay the claim, including on account of litigation under an insurance policy; rival claims or open title; freezing/blocking of insurance policies by government agencies; as well as consumers not in country and hence, taking time to settle the proceeds.
While the IRDAI communication did not specify the total unclaimed amount, its annual report for 2022-23, providing details of death claims of life insurers, said ₹206 crore under nearly 700 individual (life) business were unclaimed. In Group business, the amount was ₹2 crore.
Unclaimed amounts more than 10 years old, not just in life and non-life insurance covers, but also in small savings schemes, EPF, PPF schemes, and accounts of Coal Mines PF, are to be transferred to the Senior Citizens Welfare Fund set up by the Centre and utilised for schemes promoting senior citizens welfare. In a written reply in Rajya Sabha on December 4, 2019, Minister of State for Social Justice and Empowerment Rattan Lal Kataria informed the amount available with the Ministry of Social Justice and Empowerment under the SCWF was ₹410.23 crore.