The Insurance Regulatory & Development Authority of India (IRDAI) has amended the Master Circular on Unclaimed Amounts of Policyholders due to a rise in unclaimed amounts with the insurers raising regulatory concerns.
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The insurers are also urged to step up their efforts to find the legitimate owner of outstanding payments and make sure that funds are distributed quickly.
According to the IRDAI circular dated February 15, 2024, “Basis discussion with the insurers it is to understand that one of the reasons for the increase in the unclaimed amounts are cases where the consumers are traceable but insurers are not in a position to pay the claim for various reasons, including:
- due to any litigation under an insurance policy;
- due to rival claims or open title
- due to the freezing/blocking of insurance policies by any government agency
- where benefits payable during the policy with respect to the insurance policies which are in-force either by reduced paid up or by full paid-up policies on due date, but shifted to unclaimed due to a six-month window for payments;
- consumers have not claimed annuity options and maturity proceeds from pension and insurance products;
- consumers out of the country and hence taking time to settle the proceeds;
How to check if there is any amount unclaimed under LIC policyHere are the modifications suggested by the IRDAI from the Master Circular no. IRDA/F&A/CIR/Misc/202/11/2020 dated 17th November 2020 (Master Circular):
Clause 2(1)(c) of the Master Circular stands modified as under:
“Due date” shall mean the date on which any amount or claim is due for payment as per the terms and conditions of the insurance policy and/or the extant regulatory framework;
Clause 2(1)(f) of the Master Circular stands amended to the extent stated as under:
“Unclaimed Amounts” shall include any amount held by an insurer, but payable to consumers, including income accrued thereon, on account of their non contactability through any means and remaining unpaid beyond twelve months from the due date of such amount.
Provided, irrespective of the status of the contactability, the following pending amounts shall be held under separate sub-heading “Litigation and others” under unclaimed amounts till such time the payments are made:
- due to any litigation under an insurance policy;
- due to rival claims or open title;
- due to freezing/blocking of insurance policies by any government agency;
Provided further that the amounts payable under the following shall not be considered as unclaimed amounts:
Annuity policies; and all in-force insurance policies including reduced paid up and fully paid up on due date; in respect of claims initiated by consumers;
- Explanation: 1 and 2: No change.
- Explanation 3: A consumer shall be termed non-contactable when such consumer has not responded to any of the insurer’s communications.
- Explanation 4: All amounts, where the consumer is not traceable, shall continue to be part of the unclaimed amounts.
After Clause 2(1)(f), following new clause is added:
Clause 2(1)(g): ‘Consumer’ for this circular shall mean proposer, policyholder, life assured, nominee, beneficiary, or any other person who has a financial interest in the policy as per the terms and conditions of the insurance policy.
The insurers have also been asked to take the following actions to lower the current number of unclaimed claims and prevent further accumulation of unclaimed claims:
- Reminder for current policyholders to update their mobile number, email address, current address, bank account details, nominee data, etc. at the time of payment of the renewal premium (online or offline).
- Hold responsible the corresponding agents, middlemen, group master policyholders, and other channels of distribution engaged in the request for customer tracking and update the contact information, bank account information, etc.
- Complete ongoing KYC for current rules and re-KYC of minors on immediately attaining majority.
- automatically validate mobile numbers and email addresses of existing and new consumers to ensure that these details are not of their distribution channels.
- Put in place fool-proof systems to automatically validate mobile numbers and email addresses of existing and new consumers to ensure that these details are not of their distribution channels.
- Engage with Credit Bureaus, Account Aggregators, CSC/POS, e commerce portals for tracing consumers.
- Advertise in Print and Digital media to reach out to consumers who are not traceable.
- In all communications include a footnote advising the consumer to update contact details, nominee details, and bank account details in case of any change.
- Option to update their contacts including email-ids, bank details, and nominee details at website/portal/app.
- Send advance notifications in respect of maturity claims and survival benefits at least 6 months in advance, through all possible modes, and
- Advise them to provide KYC/Bank details; follow-up notifications may be sent every 2 months thereafter to customers who have not responded.
- Develop an online tool for processing and payment of unclaimed amounts once the consumers identify the amounts due to them on the websites of insurers
- Put in place appropriate systems and controls to address fraudulent claims and practices.
