To tackle the steep increase in unclaimed money lying with insurers, the sector regulator has announced some key steps.
Come May, a policyholder or his/her nominee can check online any unclaimed money pending with an insurance company. Further, for all new policies, the insured must mention bank account details in the proposal form itself to ensure faster maturity/claim settlement.
The Insurance Regulatory and Development Authority (Irda) has said the rising amount of unclaimed money with insurers is a matter of concern. In fact, data with the regulator show between 2009-10 and 2012-13, there has been more than a three-fold rise in it.
Delays in settlement of claims, lack of awareness and failure to intimate a change in address on the part of dependents are some of the reasons that have pushed up the amount from Rs 1,373 crore in 2009-10 to Rs 4,866 crore in 2012-13.
In contrast, RBI data show that unclaimed money worth Rs 2,474 crore is lying in one crore bank savings accounts as on end-December 2012.
For smooth transfer of policyholders unclaimed money, Irda has now advised companies to take bank account details of the insured at the time of filling out the proposal form.
Insurers will also be required to collect proof of the bank account, such as a cancelled cheque, to ensure authenticity. The insured can change the bank account without any charge.
In case of a death claim, the insurer will take the bank account details of the nominee.
Insurers will remit claims, maturity payments and any other amount due to policyholders only through the electronic mode, such as NEFT, Real Time Gross Settlement, Interbank Mobile Payment service or any other e-mode approved by the RBI.
Insurance companies will have to display on their websites information about unclaimed amount beyond six months from the due date.
Irda, in a circular issued in 2010, had said that insurers cannot appropriate the unclaimed amount of policyholders and must disclose the amount separately as current liabilities in the balance sheet. Insurers now have to show age-wise analysis of the unclaimed amount.
Analysts attribute the spurt in unclaimed amount to several factors. First, claims settled by insurers may not have been paid to policyholders because of litigation. Second, the insurer might not have refunded, at the time of claim settlement or maturity payment, any excess premium collected from the policyholder. At times, even policyholders forget to encash cheques issued by the