Comprehensive overview of unclaimed policy amounts and regulatory measures in India

What steps can insurers and policyholders take to reduce unclaimed amounts proactively?

Insurers must ensure the money goes to the intended recipients rather than being unclaimed for over ten years. Below listed are some of the practices that insurance companies can follow:

• Publish information regarding unclaimed insurance funds of INR 1000 or more on their official websites per the directives of the Insurance Regulatory and Development Authority of India (IRDAI).
• Establish a system that enables policyholders and beneficiaries to locate any unclaimed funds within the insurance company by entering specific policy details, including (i) policy number, (ii) PAN of the policyholder, (iii) Name of the policyholder, and (iv) Date of Birth of the Policyholder.
• During the proposal stage, insurers must make it mandatory to provide contact details and bank information, collecting necessary bank proofs from policyholders. Additionally, it offers tools for policyholders to update their contact information and preferences easily.
• Introduce penny drop verification to authenticate the policyholder’s bank account.
• Keep policyholders and beneficiaries informed about any updates, changes, and maturity details through regular SMS, email, or other approved modes of communication. Regularly review and update policyholder/beneficiary contact and bank details.
• Collaborate with the agent who initially sourced the policy to obtain the latest details from the policyholder.
• Ensure there are no outstanding payouts from previous policies when processing current policy payouts.
• Authorise electronic mode as the exclusive method for remitting proceeds of all claims, maturity payments, or any other sums due to policyholders or beneficiaries.
• Implement advanced analytics and automation tools to identify potential unclaimed policies and engage policyholders proactively.

Whether you are a policyholder yourself or a nominee to an insurance policy, you can take the following steps to avoid letting your money remain unclaimed with the insurance company:

• Maintain a comprehensive record of your policy information by creating a detailed list of all your investments, including calendar entries indicating key payout dates such as maturity and survival benefits.
• Regularly monitor and oversee all your policies using the available facilities provided by your insurance provider.
• Convert all your policies into electronic formats and manage them collectively in a single e-Insurance account accessible online.
• Ensure that all your insurance providers update your latest contact information.
• Update your NEFT payment details with each insurer to ensure you receive all payouts without disruption.
• To facilitate smooth communication, keep your family members and nominees informed about the details
• Assign nominees for all your policies to ensure clarity and ease of processing in case of any eventuality.

Initiatives which can be driven by the IRDAI in the insurance sector

In addition to the efforts taken by the Insurance Regulatory and Development Authority of India (IRDAI), the regulator can strongly advocate for automating processing and identification procedures related to unclaimed amounts within the insurance industry. Many insurance companies rely on manual processes for identifying and transferring unclaimed amounts to designated accounts. This manual approach needs to be revised to improve accuracy and timeliness.

Implementation of automated systems:

Encourage insurance companies to invest in and implement automated systems to streamline the identification and processing of unclaimed amounts. These systems can leverage advanced algorithms and data analytics to identify policies with unclaimed benefits efficiently.

Integration with database systems:

Advocate for integrating automated systems with comprehensive database solutions that store and manage policyholder information. This integration ensures accurate identification and reduces the likelihood of overlooking eligible beneficiaries.

Centralised unclaimed deposits portal:

IRDAI may institute a centralized hub where individuals can conveniently access information about their unclaimed amounts from multiple insurance companies, streamlining the otherwise intricate process of tracking such funds.

In conclusion, there is a considerable requirement to streamline the procedure for rightful beneficiaries to recover unclaimed funds. The Association of Registered Investment Advisers has recommended making nominations mandatory for all financial assets and other proposals. Presently, the sole recourse is to depend on the government and regulatory bodies to establish unified digital platforms for diverse financial assets and update the process.