Irdai Notifies For Speedy Disbursal Of Unclaimed Insurance Money
The Insurance Regulatory and Development Authority of India (Irdai) has made changes to the master circular on unclaimed amounts of policyholders in response to a rise in unclaimed amounts, which has raised regulatory concerns. To safeguard the interests of insurance policyholders, the Irdai has proposed draft guidelines that include five major changes.
The insurers are also encouraged to make efforts to locate the legitimate owners of outstanding payments and ensure that the funds are distributed quickly. The Irdai circular issued on 15 February 2024, states that, based on discussions with insurers, one of the reasons for the increase in unclaimed amounts is cases where the consumers can be traced, but the insurers are unable to pay the claim due to various reasons.
Some other reasons Irdai stated are due to any litigation under an insurance policy, due to rival claims or open title, due to the freezing or blocking of insurance policies by any government agency where benefits payable during the policy with respect to the insurance policies which are in-force either by reduced paid up or by full paid-up policies on the due date, but shifted to unclaimed due to a six-month window for payments, consumers have not claimed annuity options and maturity proceeds from pension and insurance products and consumers out of the country and hence taking time to settle the proceeding.
Earlier also, the Insurance Regulatory and Development Authority of India (Irdai) recommended several modifications to promote business ease, minimise stakeholder compliance obligations, and safeguard policyholder interests.
According to the Irdai circular dated 14 February 2024, following further deliberation draft Insurance Regulatory and Development Authority of India (Protection of policyholders' interests and allied matters of insurers) regulations, 2024 is proposed to be issued which consolidates the provisions of the following regulations namely
(a) The Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002
(b) The Insurance Regulatory and Development Authority of India (Places of Business) Regulations, 2015;
(c) The Insurance Regulatory and Development Authority of India (Fee for registering cancellation or change of nomination) Regulations 2015;
(d) The Insurance Regulatory and Development Authority of India (Fee for granting written acknowledgement of receipt of Notice of Assignment or Transfer) Regulations, 2015;
(e) The Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations, 2016;
(f) Insurance Regulatory and Development Authority of India (Outsourcing of Activities by Indian Insurers) Regulations, 2017;
(g) The Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests) Regulations, 2017;
“The proposed consolidation of eight regulations into a single IRDAI (Protection of policyholders' interests and allied matters of insurers) regulations, 2024 promises significant benefits for both customers and insurers. For customers, the introduction of a standardised 30-day free look period for all policies, electronic issuance of insurance policies meeting defined criteria and the mandatory inclusion of nomination provisions across life, general and health insurance bring clarity and protection,” said Dhirendra Mahyavanshi, chief executive officer (CEO) and co-founder of Turtlemint.
Mahyavanshi further added that the facilitation of electronic transfer of refunds and claims payments streamlines processes, ensuring a seamless experience for policyholders.
“Insurers, on the other hand, benefit from reduced administrative burdens, as the requirement for filing advertisements with the authority and reporting outsourcing activities is eliminated. The relaxation of prior approval requirements for opening specified places of business and foreign branches incentivises expansion for insurers with a proven track record,” mentioned Mahyavanshi.
