Insurance Regulatory and Development Authority of India (IRDAI) has made few modifications to the circular on managing the unclaimed amounts released on 1st July 2015. All the life insurance companies are directed to adhere to the below modifications:-
1. Nonlife, Health and Life (Including ULIPs) Insurer shall maintain a single segregated fund to manage all unclaimed monies and the sum of such fund shall be invested in money market instruments and / or fixed deposits of scheduled banks.
2. Treatment of Investment IncomeFurther to the provisions of the regulation 8 (4) of the IRDA (Protection of Policyholders’ Interests) Regulations, 2002, all insurers shall credit the investment income accruing on the unclaimed amount to the respective identified unclaimed account as under:-
i. The investment income on the accumulated unclaimed amount shall be credited with effect from October 1, 2015. For the financial year 2015-16, the proportionate investment income at the interest rate per annum applicable to saving bank account of State Bank of India shall be credited to the fund.
ii. From financial year 2015-16 onwards, the investment income earned shall be allocated to unclaimed amount fund.
The insurer shall pay the identified unclaimed amount along with the investment income so credited, to the insured/policyholders/claimants. However, in case of any award/order made by a statutory body including a court, which includes an interest component, it shall not carry any further interest.
3. Recovery of Expenses
Insurers may recover administration and fund management expenses from the unclaimed amounts. However, such recovery shall not in any case exceed 20 basis points per annum of the said underlying funds.
Key notes:-
The effective date of the circular (other than 2(i)) stands extended to January 01, 2016
The above circular is not applicable to General Insurance Companies
The regulator has issued revised circular to all the Life Insurance Companies
