Rs.20,062 crore Unclaimed Deposit is lying in Life Insurance Sector

The life insurance sector in India has reported unclaimed amounts totaling ₹20,062 crore as of March 2024, according to the Insurance Regulatory and Development Authority of India (IRDAI). The regulator highlighted this significant figure in its annual report and detailed measures taken to address the issue.

Unclaimed Amounts and Reduction Drive

At the beginning of the financial year 2023-24, the total unclaimed amounts with life insurers stood at ₹22,237 crore. To tackle this, IRDAI launched a special six-month drive from June 2023 to November 2023. The initiative aimed to expedite refunds to policyholders and reduce the accumulation of unclaimed amounts.

During this period, life insurers achieved a net reduction of ₹1,018.23 crore in unclaimed funds. IRDAI closely monitored the progress of this drive on a monthly basis.

New Guidelines for Better Disbursement

To further benefit policyholders, IRDAI issued modifications to its “Master Circular on Unclaimed Amounts” on February 16, 2024. The revised circular included updated definitions of “unclaimed amounts” and introduced measures to help insurers efficiently identify and disburse these funds. These steps are expected to reduce existing unclaimed amounts and prevent further accumulation.

Benefits Paid by the Life Insurance Industry

In the financial year 2023-24, the life insurance sector paid total benefits of ₹5.77 lakh crore, which accounts for 70.22% of the net premium collected. Benefits paid due to surrenders and withdrawals increased by 15.29%, reaching ₹2.29 lakh crore. Notably, the public sector life insurer accounted for 58.36% of these payments.

Death Claims

The industry also reported an increase in death claim payments. Life insurance companies paid ₹48,512 crore in death claims during the year ended March 2024, compared to ₹46,380 crore in the previous year.

Summary

IRDAI’s efforts to reduce unclaimed amounts and improve consumer benefits reflect a proactive approach to addressing policyholder concerns. With significant benefits paid out and a focus on transparency, the life insurance sector continues to play a vital role in the financial ecosystem.