Kathmandu. The Insurance Regulatory and Development Authority of India (IRDAI) has been facing a headache as life insurance companies have started piling up the outstanding amount due to insureds. The regulator is looking into the matter with concern, saying that it is not right for the common man to be deprived of a large portion of the amount saved by life insurance companies in the hope of availing it in the event of future hardship.
According to the IRDAI’s annual report, the unclaimed amount of life insurance companies at the beginning of the financial year 2023-24 was INR 222.37 billion (Rs 355.79 billion 20 lakhs).
To reduce unclaimed amount, expedite refunds to insureds and control further accumulation of unclaimed amount with insurers, a special campaign was launched by the Insurance Authority of India for a period of 6 months from June 2023 to November 2023. During this period, the progress in the payment of unclaimed amount with life insurers was monitored monthly. During this special campaign, there was a net shortfall of INR 10.1823 billion (Rs. 16.391680 thousand) in the case of life insurers.
Amendments to the ‘Main Circular on Unclaimed Amount’ were issued on February 16, 2024, with amendments to some definitions, including the definition of ‘Unclaimed Amount’, for the benefit of the insured. This circular suggests measures to be adopted by insurers to reduce the existing unclaimed amount and control further accumulation of unclaimed amount, for proper identification and effective distribution.
Measures suggested to insurers
- To reduce the existing unclaimed amount, existing insureds should be encouraged to update their current details such as mobile number, email address, current address, bank account details, details of the intended beneficiary, etc. at the time of payment of renewal premium (online or offline). Notifications should be sent to the insured through various channels.
- ##Get updated customer identification details for existing policies as soon as the policy matures and get updated personal details again in case of minors.
- ##Contact credit information centers, account registrars, payment points, e-commerce portals to contact consumers.
- ##Advertise in print and digital media to reach out to unreached consumers Must.
- All communications sent to the insured must include a footnote advising the consumer to update the contact details, intended recipient details and bank account details if there is any change in the insured’s contact address or any other details.
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##To prevent future accumulation For
- Take initiatives to make relevant agents, intermediaries, group policyholders and other distribution networks involved in the insurance offer responsible for finding consumers and updating contact details, bank account details, etc.
- Clear systems should be implemented to automatically verify mobile numbers and email addresses of existing and new customers. So that these details are not limited to their distribution network.
- ##The insurer’s website, portal and app should enable the insured to update their contact details including email ID, bank details and details of the desired person at any time with a secure login.
- ##Advance notice should be sent through all possible means regarding maturity claims and living benefits at least 6 months in advance and request to submit customer identity, bank details. If the customer does not respond after that, a reminder should be sent every 2 months.
- ##Insurers’ websites should develop online tools so that consumers can apply for payment as soon as they identify the amount they are owed.
- ##Applicable systems and controls should be implemented to address fraudulent claims and practices.
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