Need to track, trace unclaimed insurance funds: Irdai member Iyer

IRDAI member Swaminathan Iyer stresses the need to track ₹1.9 trillion in unclaimed life insurance funds to build trust and boost penetration, vital for achieving 'insurance for all by 2047'

There is a significant need to track and trace unclaimed funds, and the insurance regulator is in discussion with different networks and databases to reach out to the concerned people. This will serve as a form of “assurance” that will drive insurance penetration in the country, said Swaminathan Iyer, member (life), Insurance Regulatory and Development Authority of India (Irdai), on Tuesday. 

“There is a need for tracking and tracing unclaimed funds. There is a huge amount of unclaimed funds — close to Rs 1.9 trillion — across various financial services. So, collaboratively as a regulator, we are also talking to different networks and databases on how we can reach out to those people. That is also a part of assurance,” Iyer said during the CII Financing Summit. 

Unclaimed amounts with life insurance companies dropped marginally at the end of FY24 to Rs 20,062 crore from Rs 22,237 crore at the beginning of FY24, Irdai’s annual report for FY24 showed. The industry witnessed a net reduction of Rs 1,018 crore in unclaimed amounts with life insurers during this special drive period, from Rs 22,237 crore at the beginning of the financial year. 

According to Iyer, protection gaps in the industry can be addressed by reducing product complexity and ensuring affordability, accessibility, acceptability and assurance in order to achieve the goal of “insurance for all by 2047.” 

The industry is also grappling with the issue of trust, and the need for insurance is not yet fully felt. He added that the industry should set smaller targets every 2–3 years, reach the hinterlands of the country and look at ground-level realities. 

“Even after 25 years, business from urban areas still accounts for 85 per cent of insurers’ business. Insurers need to find ways and means to reach rural areas,” Iyer said.