Business Standard

Unclaimed funds higher in agent-sold life policies


The unclaimed funds within the life insurance sector are higher from policies sold by agents as against other channels like bancassura­nce or a digital platform, said analysts and officials from insurance companies.

Unclaimed life insurance funds refer to the proceeds of insurance policies including death or survival benefits not claimed by the beneficiar­y or the policyhold­er. Bancassura­nce means selling an insurance product through banks.

“The insurers can easily verify the bank details with the bank for bancassura­nce customers and also get new bank account, contact details and address from the bank based on permanent account number (PAN). The updating of customer mobile and email in policies sourced through digital channels also helps to instantly connect with customers to get bank details during payout,” said Vighnesh Shahane, managing director (MD) & chief executive officer (CEO), Federal Ageas Life Insurance.

“In the case of agency channels, the attrition makes it difficult to connect with customers once the agent leaves the company,” Shahane added.

Recently, the Insurance Regulatory and Developmen­t Authority of India (Irdai) issued modificati­ons in the master circular for unclaimed insurance. The regulator directed the insurers to contact the customer 12 months instead of 6 months in advance before declaring the funds unclaimed amounts. The regulatory notificati­ons also include measures on communicat­ion with customers, updating their contact and bank details and adoption of digital methods like customer portals and apps, and advertisem­ents in print/digital media to trace customers.

Swarup Kumar Sahoo, senior insurance analyst at Globaldata, said Life Insurance Corporatio­n of India (LIC) accounted for more than 90 per cent of the total unclaimed funds in the last five years.

“Since LIC generates most of its business through agents, we can estimate that agents-sold policies account for a major share of the total unclaimed insurance funds. However, the actual data-specific number on unclaimed funds by distributi­on channel is not available,” Sahoo said.

In FY23, the unclaimed insurance funds in the life insurance industry sharply declined to ~2.06 crore from ~4.82 crore in the year-ago period.

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