IRDA directs insurers to pay out dues to policyholders on time

Insurance regulator IRDA today asked insurers to take steps so as ensure timely payout of dues to policyholders, amid a rising trend in amounts lying unclaimed with companies.
In 2012-13, about Rs 4,865 crore remained unclaimed with insurance companies. The same was at Rs 3,037.46 crore in 2011-12, Rs 1,945.93 crore in 2010-11 and Rs 1,372.64 crore in 2009-10, the Insurance Regulatory and Development Authority (IRDA) said in a circular.
It has directed insurers to oversee timely payouts through a Policyholder Protection Committee in order to bring better governance, transparency, and smooth transfer of the amount due to the policyholders.

"While unclaimed amount is not uncommon in insurance sector, a steep increase in the unclaimed amount is a cause of concern...The Audit Committee shall have oversight on unclaimed amounts. The Committee shall also oversee compliance of the provisions," it said.
It further asked insurers to display on their websites information about any unclaimed amount of policyholders e.G. death claim, maturity claim, survival benefits, premium due for refund, premium deposit not adjusted against premium and indemnity claims remaining unclaimed beyond six months from the due date for settlement of the claim amount.
IRDA also asked them to remit proceeds of claims, maturity payments or any other sum due to the policyholders, or nominees, or assignees, only through the electronic mode.

For new insurance policies, IRDA said all insurers shall take all the required details of the bank account of the insured and also provide them an option to change the bank account or modify the bank account particulars if the insured desires so.

"In order to minimise the unclaimed amount, insurer shall endeavour to keep the policyholder and beneficiary informed about any updates, changes and maturity details by SMS alerts or e-mail or any other mode as may be specified by the Authority on regular basis," it said.
It also directed the insurers to reduce unclaimed amount by identifying the insured and creating awareness.

The circular comes into force from April 1, 2014, IRDA said.