The Insurance Regulatory and Development Authority of India (IRDAI) wants to ensure that policyholders are paid any unclaimed amounts on time. To ensure that there is a higher responsibility on insurers, the insurance regulator has said in its latest circular that companies have listed out steps taken to contact customers to clear all dues.
In its consolidated circular to the insurer on unclaimed amounts of policyholders, IRDAI said that every company has to submit details of the unclaimed amount by policyholders and the actions taken. This has to be done on a half-yearly basis.
Unclaimed amounts refer to the insurance claims or surrender amounts that belong to the policyholder but have not yet been collected by them. Insurers have to display information of any outstanding amount above Rs 1,000. This information has to be displayed even after 10 years after it is due.
What steps do insurers have to take?
Insurers have to provide information on the unclaimed amounts lying with them. Once a policyholder visits the insurers’ website, he/she will be able to search for any unclaimed amounts based on pan number, policy number, name of the policyholder or policyholder date of birth.
A policyholder will be eligible to claim the dues up to 25 years from the date of transfer of such dues to the Senior Citizen Welfare Fund. After 10 years of laying unclaimed, these dues are transferred by insurers to the government’s Senior Citizen Welfare Fund.
In case a policyholder/beneficiary doesn’t claim these dues even after 25 years, these funds will then be transferred to the central government.
The insurance company's chief executive as well as chief compliance officer will have to certify the information on a half-yearly basis. The regulator said that the unclaimed amounts and the investment income accrued on these dues will have to be furnished to IRDAI.
Insurers can recover administration and fund management expenses on a quarterly basis from the unclaimed amounts. This can be up to a maximum of 20 basis points per annum on the funds at the beginning of every quarter.
How to enroll new policies?
IRDAI has said that at the proposal stage, the insurer has to take the bank account details of the policyholder. This will be applicable for all policies where the annual premium is above Rs 10,000.
All insurance payments, including death claims and surrender benefits, have to be paid only through electronic modes including NEFT, ECG, RTGS, IMPS among others.