Virendra Pandit
New Delhi: Life Insurance Corporation of India (LIC), the country’s state-owned insurance giant, has disclosed that it is sitting on unclaimed funds to the tune of a massive Rs. 21,539 crore, as of September 2021.
The LIC’s disclosure came in the Draft Red Herring Prospectus (DRHP) it has filed with the market regulator Securities Exchange Board of India (SEBI) for its forthcoming Initial Public Offer (IPO), the media reported on Wednesday.
The unclaimed funds include interest earned until September 2021.
In the DRHP, LIC said the unclaimed amount increased in the last three financial years from Rs.13,843.70 crore (March 31, 2019), to Rs. 16,052. 65 crore (March 31, 2020), and to Rs. 18,495 crore (March 31, 2021).
As per rules, an insurer must display information on its website about any unclaimed amount of Rs 1,000 or more (which should continue even after completion of 10 years), and a facility should be provided on the portal to enable policyholders or beneficiaries to verify the unclaimed amount due to them.
A circular issued by the sector regulator Insurance Regulatory and Development Authority of India (IRDAI) prescribes the procedures relating to the mode of payment of the unclaimed amount, communication to the policyholders, accounting, utilization of investment income, etc.
The Senior Citizens’ Welfare Fund (SCWF) Act mandates the transfer of unclaimed amounts of the policyholders held beyond 10 years to the Fund, which should be treated as per the SCWF Rules, 2016.
These Rules specified the entities that are required to transfer the amounts into the SCWF and contain provisions pertaining to the administration of the Fund, it said.
“All insurers must adhere to the accounting procedure issued by Budget Division, Department of Economic Affairs, the Ministry of Finance, for transfer of the unclaimed amounts into the SCWF,” the DRHP said.
Every financial year, the process laid down in the SCWF Rules read with the accounting procedure for transfer of the funds into the Fund must be followed, it said, adding all insurers must make transfers to the SCWF by March 1 every year.
Unclaimed funds include amounts payable to the policyholder as a death claim, maturity claim, survival benefits, premium due for refund, or any such amount remaining unclaimed beyond six months from the due date for settlement of the claim amount.