The High Court of Karnataka on Tuesday directed the Insurance Regulatory and Development Authority of India (IRDA) to ensure that insurance companies transfer the unclaimed insurance amount after a period of 10 years as per the mandate of the Senior Citizens’ Welfare Fund (SCWF) Act, 2015.
Also, the court said the IRDA can take periodical reports from insurance companies to ensure proper transfer of unclaimed insurance amount as per the provisions of the 2015 Act, the SCWF Rules, 2016, and the master circular issued by the IRDA on transfer of unclaimed amounts.
A Division Bench comprising acting Chief Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum issued the direction while disposing of a PIL petition filed by The Legal Attorneys and Barristers, Bengaluru. The petitioner had sought a direction to frame a policy to trace legal heirs or relatives of the insured persons to disburse unclaimed amount and for utilisation of unclaimed amount after certain period.
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While terming that the petition was filed with a misconception that there was neither a regulating body nor mechanism for unclaimed insurance amounts, the IRDA has submitted to the court details of the SCWF Act, which was specifically enacted for transfer and utilisation of unclaimed insurance amounts, and the mechanism of transfer of unclaimed amount to the SCWF by insurance companies.
Appearing for the IRDA, advocate Sriranga S. pointed out to the court that the IRDA is keeping a regular watch on the insurance companies on transfer of unclaimed amount and a total amount of ₹81.65 crore in 2018 and ₹398.66 crore in 2019 was transferred to the SCWF by the companies by following the procedure laid down for transfer of unclaimed insurance amount.
The IRDA also informed the Bench that the SCWF Act and Rules lay down a complete framework for the insurance companies to trace the insured persons or their legal heirs using multiple communication mode for disbursement of insurance amount besides publishing the details of unclaimed insurance on their websites by preparing a list of such accounts by September 30 of every financial year.
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Also, the IRDA denied the allegations made in the petition that there are thousands of crore of rupees lying with the insurance companies in the form of unclaimed insurance amount while pointing out that overall death claim settlement ratio of life insurance industry for the financial year 2018-19 was 97.64%.