The unclaimed money at Rs 2,476 crore has in two years swelled by 136% and reached a high of Rs 5,848 crore by March 2014.
Industry insiders say that several factors have led to the rise in the unclaimed money and the primary reason has been foreclosure and maturity of ULIPs that were 3-5 year products, where in many cases the insurers have not been able to transfer the payments to the beneficiaries for lack of correct address and verification of a true claimant.
"While a lot of investors could not be traced for lack of updation of their change in address, a rise in agent attrition after 2010 has also resulted into a rise in unclaimed money as the agents are directly in touch with the investors," said an industry insider. He, however, added that between 2005 and 2008 the Ulip sale for some insurers rose to a high of up to 85% of the total policies sold. The industry also witnessed a rise in misselling of insurance products in the same period.
While 20, out of the 24 life insurance companies, saw a rise in the unclaimed amounts with them in the last two years, four players LIC, Reliance Life, Bajaj Allianz Life and ICICI Prudential Life accounted for an almost 70% of the total unclaimed amount of over R5,800 crore with the industry till March 2014. LIC and Reliance Life have unclaimed amounts of Rs 1,548 crore and R1,502 crore, respectively. Over the last one year, the unclaimed amount of LIC and Reliance Life rose by 40% and 143%, respectively, and in absolute numbers, the jump for Reliance Life was the highest among all insurers as its numbers rose from Rs 618 crore in March 2013 to Rs 1,502 crore in March 2014.
When asked about the reason for the sharp rise in their unclaimed amounts, Reliance Life spokesperson said, "The figures are not comparable since the definition of revival and lapse period for Ulip policies differ from company to company. In some case the policy never lapses till maturity while others like Reliance Life take a more stringent view and the policy lapses after non-payment of certain number of premiums and is reported accordingly. Also the proportion varies according to the product mix of Ulip and traditional till 2008. Lower the amount of Ulips sold, lower the number."
In February 2014, Irda had expressed its concern over the steep rise in unclaimed amount.