Picking pockets

GOVERNANCE

unclaimed funds insurance

 

Picking pockets

Both life and non-life insurance companies are sitting on huge funds
belonging to the investor or policy holder

 

by Dr G S Sood

 

Mis-selling of products is the single most important reason that is hurting the growth of insurance industry in India.”. This statement by Finance Minister P Chidambaram only reflects the deep malaise that is plaguing the financial services industry in general and insurance sector in particular. There is utter lack of transparency and deliberate denial of information to consumers and investors. But for the recent study published by Mint, no one knew the amount investors in the insurance sector have been duped of. As per the study, the sector collected Rs 3.7 trillion from the sale of fresh regular premium policies in the last seven years wherein the investors lost Rs 1.56 trillion.

 

The question that needs to be asked is how do insurers move the lapsed money and other such monies belonging to the investors to their profit and loss account when the same rightfully belongs to the policyholders. The Society for Consumers’ & Investors’ Protection (SCIP) was flooded with such questions and requests relating to unclaimed money running into thousands of crores lying with various public and private insurance companies for some reason or the other. These reasons primarily comprise the failure of insurance companies to search, find and make payment of the said amount to legally entitled claimants and beneficiaries...Read More