Over Rs 20k cr of unclaimed amounts lie with life insurers at end of FY24

Unclaimed amounts with life insurance companies dropped marginally at the end of FY24 to Rs 20,062 crore from Rs 22,237 crore at the beginning of FY24, owing to initiatives taken by the Insurance Regulatory and Development Authority of India (Irdai), its annual report for FY24 revealed.  “In order to reduce the unclaimed amounts, expedite refunds to consumers and to contain the further accumulation of unclaimed amounts with the insurers, a special drive was initiated by Irdai for a period of six months during June 2023 to November 2023, and the progress of clearance of unclaimed amounts lying with the life insurers during this period was monitored on a monthly basis,” Irdai said in its annual report.  The industry witnessed a net reduction of Rs 1,018 crore in unclaimed amounts with the life insurers during this special drive period, from Rs 22,237 crore at the beginning of the financial year.  The regulator also brought an amendment to the ‘Master Circular on Unclaimed Amounts’ in February 2024 to aid in proper identification and efficient disbursement of the unclaimed amounts. It modified a few definitions, including that of ‘unclaimed amount’, and suggested measures for insurers to adopt in order to reduce existing unclaimed amounts and prevent further accumulation.  Irdai also adopted several measures to reduce existing unclaimed amounts, asking insurers to prompt policyholders to update their contact details at the time of renewal, regularly update their Know Your Customer (KYC) details, engage with credit bureaus and aggregators to trace consumers, advertise in various media channels, and ask consumers to update their details in all communications (except those related to the termination or exit of contracts).  Additionally, the Insurance Information Bureau (IIB) provided alternate contact details for about 80,000 unclaimed cases out of four lakh queries made over two years, amounting to Rs 9,000 crore. The Bima Bharosa portal of Irdai also includes a web link for unclaimed amounts, giving policyholders or beneficiaries the option to search for unclaimed amounts.  Further, the regulator has suggested a slew of additional measures to life insurers to prevent the accumulation of unclaimed amounts. These include holding distribution partners accountable for tracing customers and updating their details, setting up systems to automatically update contact details, making provisions on company websites, sending advanced notifications regarding maturity claims and survival benefits at least six months in advance through all possible modes, and developing online tools for processing and paying unclaimed amounts.  Recently, the Minister of State for Finance, Pankaj Chaudhary, in his written response to the Lok Sabha, said that Life Insurance Corporation of India (LIC) had unclaimed maturity amounts totalling Rs 880.93 crore in FY24, up from Rs 815.04 crore in FY23.