Information provided by the insurance regulatory and development authority of India (IRDAI) shows that, as of 31 March 2024, insurance companies have unclaimed insurance funds worth Rs21,718 crore which declined from Rs23,699 crore as of 31 March 2023. However, IRDAI does not maintain data about amounts claimed by beneficiaries and unclaimed life insurance policies,
the government told the Lok Sabha.
In a written reply, Union finance minister (FM) Nirmala Sitharaman said, "IRDAI has further informed that it does not maintain data regarding amounts claimed by beneficiaries out of the unclaimed amount, data on the number of life insurance policies that are currently unclaimed and average unclaimed amount per life policy."
"IRDAI has informed that it does not maintain data on the average time taken by insurers to process claims on unclaimed amounts. However, it has put in place several measures to ensure timely settlement of all claims, including claims on unclaimed amounts. Further, there exist regulatory provisions to penalise insurance companies for delayed settlement of claims, including interest payments," the minister says.
Vijayakumar alias Vijay Vasanth and Manickam Tagore B, the members of Parliament (MPs), have asked for information on unclaimed insurance funds lying with insurance companies over the past three years and steps taken by the government to raise awareness about these unclaimed funds and proposed changes to simplify the claim process.
In response, the FM says various regulatory measures prescribed by IRDAI are in place to reduce unclaimed funds and raise awareness amongst the policyholders. "Policyholder protection, grievance redressal and claims monitoring committee, a board-level committee at insurance companies, has been mandated to review the settlement of unclaimed amounts every quarter, including the number and amounts of claims and the steps taken by the company to identify policyholders or beneficiaries."
"IRDAI's Bima Bharosa portal provides access to website links of all insurers where details of unclaimed amounts held by them are displayed," the minister says.
Further, to ensure that the accumulation of unclaimed funds with the insurers is reduced, IRDAI has mandated that nominee details such as name, mobile number, email ID and address are obtained at the time of policy issuance.
The FM says nominees or beneficiaries have been facilitated with a search facility on the insurers' websites to check for any unclaimed amounts due to them based on fields like name and date of birth of policyholders, PAN of policyholders and policy number. "Based on the above information, the person can approach the insurer to claim the amount."
The MPs also asked for government plans about concerns around data privacy and security in the process of claiming unclaimed insurance funds along with the number of e-insurance accounts opened through CDSL (Central Depository Services Ltd) and NSDL (National Securities Depository Ltd).
Ms Sitharaman informed the lower house that on 24 April 2023, IRDAI issued guidelines on information and cyber security to address matters related to data privacy and security of policyholders. "As of 31 March 2024, a total of 1.83 crore electronic insurance accounts (eIAs) have been created. IRDAI has introduced mandatory issuance of e-insurance through the protection of policyholders' interests, operations and other allied matters of Insurers Regulations, 2024. E-insurance policies are more accessible to policyholders, potentially increasing the likelihood of policyholders being aware of their policies and enabling them to prefer claims when necessary," she added.
Further, IRDAI has mandated all insurers to credit the investment income accruing on the unclaimed amounts to the respective identified unclaimed accounts. All insurers are mandated to pay the identified unclaimed amount along with the investment income so credited, to the consumers whenever a claim is made as per the procedure.
Further, the insurance regulator has specified a timeline for payment of the claim and other benefits. All the insurers are required to settle the claims within the specified timelines.
According to the minister, to facilitate smoother and speedier claim settlements, IRDAI has prescribed documents required for the settlement of insurance claims. Insurers are required to display this information on their websites for information of claimants or beneficiaries. Insurers are also instructed not to reject or close a claim for want of documents or for delayed intimation of claim.
"With regard to penalties on delay in the processing of claims, insurers are required to pay interest at the bank rate plus 2% to the claimant for the period of delay. Such interest shall be paid by the insurer suo-moto along with the claim amount, which is applicable to all claims, including unclaimed amounts," the FM added.
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