Kolkata: Due to a surge in unclaimed amounts and concerns from insurers over regulatory compliance, the Insurance Regulatory & Development Authority of India (IRDAI) has come out with amended regulations and urged the insurers to step up efforts to find out the legitimate owner of outstanding payments.
IRDAI has also asked the insurers to ensure that funds are distributed quickly once the legitimate owner of the unclaimed amount is identified.
According to IRDAI guidelines, all insurers with unclaimed amounts of policyholders for more than 10 years as of September 30, have to transfer such unclaimed amounts to the Senior Citizens Welfare Fund on or before March 1 of the financial year.
IRDAI in its amended master circular on unclaimed amounts has said “Basic discussion with the insurers it is to understand that one of the reasons for the increase in the unclaimed amounts is cases where the consumers are traceable but insurers are not in a position to pay the claim. There may be various reasons, including litigation under any insurance policy, rival claims or open title, freezing/blocking of insurance policies by any government agency and where benefits payable during the policy concerning the insurance policies which are in-force either by reduced paid up or by full paid-up policies on the due date, but shifted to unclaimed due to a six-month window for payments."
The other reasons are consumers not claiming annuity options and maturity proceeds from pension and insurance products or they are out of the country and hence taking time to settle the proceeds.
IRDAI while amending the master circular has said that "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; “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.
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 foolproof 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.
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