Irda asks insurers to remit claims only electronically

The Insurance Regulatory and Development Authority (Irda) on Tuesday said insurance companies shall remit proceeds of all claims, maturity payments or any sum due to policyholders or nominees only through electronic mode. This has been done to minimise unclaimed amounts by policyholders with insurance companies, said the sectoral regulator.

However, Irda said for payments up to Rs 10,000 in life and Rs 25,000 in non-life insurance, this provision will not be applicable.

Life insurance companies have been asked to provide the option of electronic transfer to be sent to the insured within six months. In the case of non-life insurance firms, bank account details will have to be collected at the time of claim, payment of refund or renewal. In case of new insurance policies, Irda has asked companies to elicit bank account details in the proposal form.

All payments due to the insured will have to be routed through electronic clearing systems - National Electronic Funds Transfer, Real-Time Gross Settlement, Interbank Mobile Payment Service, Automated Clearing House or any other electronic mode - permitted by the regulator.

The insurance regulator said that Rs 4,866 crore was the total unclaimed amount with insurers in 2012-13, up from Rs 3,037 crore in 2011-12. The reasons for the amount being unclaimed could be change in address, lack of awareness (about existence of a policy of any family member) and delay in settlement through cheques/demand drafts (which are time-bound).

Irda has asked insurers to display information about unclaimed amounts (beyond six months from due-date) on their website. Later, this would have to be made available on a half-yearly basis. The Policyholder Protection Committee of the Board of insurance companies have also been asked to ensure timely payments to policyholders.

This will come into effect from April 1, 2014.