Interest money

Rs 25,000 cr of unclaimed money from insurance companies

New Delhi: As per a report by the Insurance Regulatory and Development Authority (IRDAI), as much as Rs 25,000 crore of unclaimed money lies with various insurance companies across the country.

The insurance regulator’s report states that up to 2020, Rs 24,586 crore of unclaimed money from policyholders lay unused with several private and public sector insurance companies. However, in the financial year 2020-21, the amount of these unclaimed funds from these insurance companies increased to Rs 24,843 crore, with more than Rs 257 crore of unclaimed money added to the account.

According to IRDAI’s definition, unclaimed money is “any amount payable to the policyholder as death claim, expiry claim, survivor’s benefit, premium due for refund, premium deposit not adjusted by in relation to premium and indemnity claims, etc. remained unclaimed beyond six months from the due date for settlement of the amount of the claim”.

The Indian government-owned Life Insurance Corporation (LIC) holds the largest chunk of unclaimed money. According to government data, LIC alone has over Rs 21,000 crore in unclaimed money as of September 2021. LIC has also earned over Rs 2,000 crore in interest on this unclaimed amount during these years.
When it comes to private life insurance companies, ICICI Prudential, HDFC, Reliance Nippon, PNB Metlife, Bajaj Allianz and Aditya Birla have the largest slice of unclaimed amounts with them. Together, these companies have over Rs 3,000 crore of unclaimed money, which is over 60% of the total unclaimed money from the private sector. In the public sector, life insurance company SBI has around Rs 384 crore of unclaimed money.
According to sources within the insurance companies, the money becomes unclaimed when after the death of the insured, no one from his family or his proxy shows up to claim his sum insured. According to insurance company officials, this is due to the fact that many policyholders who purchase a life insurance policy for their family to support themselves after they leave this world, do not inform any of the members of their family of their assurances and, due to this ignorance, none come forward. claim the insured amount. However, the government and IRDAI, through various circulars, have asked the insurance companies to first try to pay the amount to the lawful agent of the policyholders and also asked the insurance companies to ensure that timely payment is made to all policyholders. Recently, IRDAI and central government said that insurance companies should keep unclaimed money with them for a period of 10 years, after which if no claimant is found for the policyholder, the unclaimed amount should be transferred to the Elderly Welfare Fund to carry out social welfare activities for the elderly.