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In the vast landscape of India’s insurance sector, a concerning issue persists: unclaimed insurance amounts. As of the end of FY24, life insurance companies reported unclaimed funds totaling ₹20,062 crore, a slight decrease from ₹22,237 crore at the beginning of the fiscal year.
This substantial figure underscores the importance of understanding the causes behind unclaimed benefits and the steps necessary to mitigate this challenge.
Understanding Unclaimed Insurance Amounts:
Unclaimed insurance funds refer to policy proceeds that remain unpaid to policyholders or beneficiaries. This situation often arises due to:
- Lack of Awareness: Beneficiaries may be unaware of existing policies or the claims process.
- Outdated Contact Information: Insurers may struggle to reach beneficiaries due to outdated or incorrect contact details.
- Incomplete Documentation: Missing or incorrect documentation can hinder the claims process.
Regulatory Interventions:
Recognizing the growing concern of unclaimed amounts, the Insurance Regulatory and Development Authority of India (IRDAI) has implemented several measures:
- Special Drive: Between June and November 2023, IRDAI initiated a special drive to expedite refunds and reduce unclaimed amounts. This effort resulted in a net reduction of ₹1,018 crore in unclaimed funds.
- Amendment of Master Circular: In February 2024, IRDAI amended the ‘Master Circular on Unclaimed Amounts’ to enhance the identification and disbursement processes. The amendment included redefining ‘unclaimed amount’ and recommending measures for insurers to prevent further accumulation.
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Proactive Measures for Policyholders and Insurers:
To address the issue of unclaimed insurance funds, both policyholders and insurers can take proactive steps:
- For Policyholders:
- Update Contact Information: Regularly provide insurers with current contact and bank details.
- Inform Beneficiaries: Ensure that beneficiaries are aware of the policy and the claims process.
- Maintain Documentation: Keep all policy-related documents organized and accessible.
- For Insurers:
- Regular Communication: Engage with policyholders and beneficiaries through multiple channels to keep them informed.
- Leverage Technology: Utilize digital tools to track and update policyholder information.
- Transparent Processes: Clearly outline the claims process and provide assistance to beneficiaries as needed.
The existence of over ₹20,000 crore in unclaimed insurance funds highlights a critical area for improvement within India’s insurance sector. By fostering collaboration between policyholders, beneficiaries, insurers, and regulatory bodies, we can ensure that rightful beneficiaries receive their due, thereby strengthening trust in the insurance ecosystem.
