State-owned insurance behemoth LIC had unclaimed funds to the tune of Rs 21,539 crore as of September 2021, according to draft prospectus filed for IPO with market regulator SEBI.
This includes interest earned over the outstanding unclaimed amount.
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As per the Draft Red Herring Prospectus (DRHP) filed by the Life Insurance Corporation of India (LIC), the unclaimed amount was at Rs 18,495 crore at the end of March 2021 and Rs 16,052.65 crore at the end of March 2020.
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The total unclaimed amount stood at Rs 13,843.70 crore at the end of March 2019.
Every insurer is required to display information about any unclaimed amount of Rs 1,000 or more on their respective websites (to continue even after completion of 10 years) and a facility is to be provided on the website to enable policyholders or beneficiaries to verify unclaimed amount due to them.
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Further, it said, the unclaimed amounts circular by 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 SCWF Act mandates the transfer of unclaimed amounts of the policyholders held beyond a period of 10 years to the Senior Citizens’ Welfare Fund (SCWF).
The Senior Citizens’ Welfare Fund Rules, 2016 (SCWF Rules) specifies the entities that are required to transfer the amounts into the SCWF and contains provisions pertaining to administration of the SCWF, it said.
The Unclaimed Amounts Circular prescribes that the unclaimed amount, on completion of 10 years, be treated in accordance with SCWF Rules, 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,” it said.
Every financial year the process laid down in the SCWF Rules read with the accounting procedure for transfer of the funds into the SCWF must be followed, it said, adding all insurers must make transfers to the SCWF on or before March 1 every year.
