PAYMENT OF DUES TO POLICYHOLDERS AND DISCLOSURE OF UNCLAIMED AMOUNT THEREOF
CIRCULAR NO.IRDA/F&A/CIR/GLD/056/02/2014, DATED 17-2-2014
The Limitation Act, 1963 provides a time limit of 3 years for claim due to a policyholder under an insurance policy. The Authority vide circular no. IRDA/F&A/CIR/CMP/174/11/2010 dated 4-11-2010 had directed insurers not to appropriate/write back unclaimed amount of policy holders and disclose such amount as a separate line item under "Current Liabilities". In this connection, it is noticed that the year-wise break-up of the unclaimed amounts of all insurance companies put together is as under:
(Rs. in Crores)
Years Unclaimed Amount
2009-10 1372.64
2010-11 1945.93
2011-12 3037.46
2012-13 4865.81
While unclaimed amount is not uncommon in insurance sector, a steep increase in the unclaimed amount is a cause of concern. Some of the principal reasons attributable to such increase, inter alia are:
Lack of Awareness: Dependants of the insured are not aware about the insurance policy taken by the insured. Therefore in the event of untimely death of the insured, the family members are not in a position to claim the amount.
Delay: The settlement of the claims/maturity amount etc. is largely made by issuance of the cheques/demand drafts. Clearance of these instruments takes some time and in few cases the cheques/demand drafts are time-barred and remain un-presented for payments.
Change in address: In few cases, change of address is not duly intimated to the insurer. In the absence of which cheques/demand drafts issued by the insurer towards maturity payment etc. are not received by the insured and become time barred.
In order to bring better governance, transparency and smooth transfer of the amount due to the policyholders, all insurers are hereby advised as under:
1. Policyholder Protection Committee: Policyholder Protection Committee of the Board shall oversee timely payouts of the dues to policyholders. A detailed agenda items covering the following shall be placed before the Committee on quarterly basis :
(a) Payouts made by the insurer during the quarter in the format A enclosed herewith.
(b)Comparison of the payments of unclaimed amount vis-a-vis previous quarter in the format B enclosed herewith.
(c)Steps taken by the company to reduce unclaimed amount by identifying the insured, creating awareness etc.
The details of the action taken and status of the unclaimed amount in Form A along with certified copy of the minutes of the Committee shall be filed with the Authority on half yearly basis within 45 days from the end of the half year.
2.Audit Committee: The Audit Committee of the Board shall have oversight on unclaimed amounts. The committee shall also oversee compliance of the provisions of this circular.
3.All insurers are required to display the information about any unclaimed amount of Policyholders i.e. death claim, maturity claim, survival benefits, premium due for refund, premium deposit not adjusted against premium and indemnity claims etc. remained unclaimed beyond six months from the due date for settlement of the claim amount on their respective web-site in the format given below:
Sr. No. Name of the Insured Address as per records Reasons
Insurers are also required to provide a "Find"/"Search" option for convenience to search the information.
Initially insurers are advised to upload the information in the aforementioned format as at 31st March, 2014 by 30th April, 2014. Subsequently, the said information shall be updated on half yearly basis - as on 30th September and 31st March by 31st October and 30th April respectively.
Sr. No. Name of the Insured Address as per records Reasons
Insurers are also required to provide a "Find"/"Search" option for convenience to search the information.
Initially insurers are advised to upload the information in the aforementioned format as at 31st March, 2014 by 30th April, 2014. Subsequently, the said information shall be updated on half yearly basis - as on 30th September and 31st March by 31st October and 30th April respectively.
4.Insurers shall remit proceeds of all claims/maturity payments/any other sum due to the policyholders or nominees or assignees only through Electronic mode as under:
A. For existing policies:
In case of life insurance, a communication providing an option of electronic transfer shall be sent to the insured along with the next communication which is sent to the Policyholder, in any case within 6 months from the date of issue of this Circular. Further, a standard clause to this effect may be included as foot note in all future communications with the Policyholders.
In case of non-life insurance, bank account detail shall be collected in the event of claim or payment of refund or at the time of renewal.
All claims/maturity payments/other sum due to the policyholders shall be paid through electronic mode where such option has been exercised by the insured.
B. In case of new insurance policies:
i.Insurer shall take all the required details of the bank account of the insured/proposer in the proposal form. Insurer shall also insist necessary documents as a proof of the bank account to ensure authenticity of this information such as cancelled cheque etc.
In case of death claim, at the time of claim intimation, bank account details of the nominee shall be called for.
ii.Insurer shall also provide an option to the Insured to change the bank account/modify the bank account particulars in case insured desires so. Such option shall be provided to the policyholders without any charge.
iii.All payments due to the insured relating to such policy will be routed through the said bank account through Electronic Clearing System (ECS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Interbank Mobile Payment Service (IMPS), Automated Clearing House (ACH) or any other electronic mode as permitted by RBI. However,
a. In case of life insurance, payment up to Rs. 10,000/- (Ten Thousands only) per claim as provided in circular no. IRDA/F&I/CIR/AML/231/2011, dated 5th October, 2011 or such other sum as may be specified by the Authority from time to time in AML guidelines is exempted from the applicability of provisions of this clause.
b.In case of non-life insurance, policies having Sum Insured up to Rs. 25,000/- (Twenty Five Thousand only) or such other sum as may be specified by the Authority from time to time in AML Guidelines is exempted from the applicability of provisions of this clause.
A. For existing policies:
In case of life insurance, a communication providing an option of electronic transfer shall be sent to the insured along with the next communication which is sent to the Policyholder, in any case within 6 months from the date of issue of this Circular. Further, a standard clause to this effect may be included as foot note in all future communications with the Policyholders.
In case of non-life insurance, bank account detail shall be collected in the event of claim or payment of refund or at the time of renewal.
All claims/maturity payments/other sum due to the policyholders shall be paid through electronic mode where such option has been exercised by the insured.
B. In case of new insurance policies:
i.Insurer shall take all the required details of the bank account of the insured/proposer in the proposal form. Insurer shall also insist necessary documents as a proof of the bank account to ensure authenticity of this information such as cancelled cheque etc.
In case of death claim, at the time of claim intimation, bank account details of the nominee shall be called for.
ii.Insurer shall also provide an option to the Insured to change the bank account/modify the bank account particulars in case insured desires so. Such option shall be provided to the policyholders without any charge.
iii.All payments due to the insured relating to such policy will be routed through the said bank account through Electronic Clearing System (ECS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Interbank Mobile Payment Service (IMPS), Automated Clearing House (ACH) or any other electronic mode as permitted by RBI. However,
a. In case of life insurance, payment up to Rs. 10,000/- (Ten Thousands only) per claim as provided in circular no. IRDA/F&I/CIR/AML/231/2011, dated 5th October, 2011 or such other sum as may be specified by the Authority from time to time in AML guidelines is exempted from the applicability of provisions of this clause.
b.In case of non-life insurance, policies having Sum Insured up to Rs. 25,000/- (Twenty Five Thousand only) or such other sum as may be specified by the Authority from time to time in AML Guidelines is exempted from the applicability of provisions of this clause.
5. In order to minimize the unclaimed amount, Insurer shall endeavour to keep the Policyholder and beneficiary informed about any updates, changes and maturity details by SMS alerts or Email or any other mode as may be specified by the Authority on regular basis.
The circular comes into force from 1st of April, 2014.
Form A
Form B
The circular comes into force from 1st of April, 2014.
Form A
Form B
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