New Delhi: As much as Rs 25,000 crore of unclaimed money is ly- ing with various insurance companies across the country, according to a report by the Insurance Regulatory and Development Authority (IRDAI).
The insurance regulator’s report says that till 2020, Rs 24,586 crore of unclaimed money of policyholders were lying idle with multiple in- surance companies from the private as well as the public sector. However, during the financial year 2020-2021, the amount of such unclaimed money with these insurance companies rose 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 policyholder as 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 ”.
The Government of India owned Life Insurance Corporation (LIC) has the largest tranche of unclaimed money lying with them. Ac- cording to government data, LIC alone has more than Rs 21,000 crore of unclaimed money as on September 2021. LIC has also earned over Rs 2,000 crore of interest on this unclaimed amount during these years.
As for private life insurance companies, ICICI Prudential, HDFC, Reliance Nippon, PNB Metlife, Bajaj Allianz, and Aditya Birla have the largest tranche of unclaimed amounts with them. Together, these companies have over Rs 3,000 crore of unclaimed money lying with them, accounting for more than 60% of the total unclaimed money from the private sector. In the public sector, SBI Life Insurance company has around Rs 384 crore of unclaimed money.
According to sources in insurance companies, money becomes unclaimed when after the death of the policyholder, no one from their family or their nominee comes forward to claim their insured sum. This according to insurance company officials is because many policyholders who buy a life insurance policy for their family to support them after they are gone from this world, do not inform any of their family members about their insurances and due to this ignorance, none come forward to claim the insured amount. However, the government and the IRDAI through various circulars have asked the insurance companies to first try to disburse the amount to the rightful nominee of the policyholders and have also asked insurance companies to ensure that timely payout is given to all the policyholders. Recently, the IRDAI and Central government have said that the insurance companies would have to hold the unclaimed money with them for a period of 10 years, after which if no rightful claimant is found for the policyholder, the unclaimed amount has to be transferred to the Senior Citizen’s Welfare Fund to carry out welfare activities for senior citizens.