Mumbai — A senior member of India’s insurance regulator has called for an urgent overhaul of how the industry identifies and reaches policyholders or beneficiaries linked to unclaimed insurance funds — a vast pool estimated at nearly ₹1.9 trillion across the financial sector.
Swaminathan Iyer, member (life) at the Insurance Regulatory and Development Authority of India (IRDAI), said on Tuesday that the regulator is in conversation with multiple data networks and institutions to trace rightful claimants, arguing that such efforts are essential to restore trust in a sector where penetration continues to lag.
“There is a huge amount of unclaimed funds… So, collaboratively as a regulator, we are talking to different networks and databases on how we can reach out to those people,” Iyer said at the CII Financing Summit. “Tracking and tracing unclaimed funds is a form of assurance, and assurance drives penetration.”
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A Persistent Issue in a Low-Trust Industry
According to Irdai’s latest annual report, unclaimed amounts with life insurers dropped slightly in FY24 — from ₹22,237 crore at the start of the year to ₹20,062 crore by March 2024. A special drive recovered around ₹1,018 crore, but the broader stock of unclaimed financial assets across India remains enormous.
Insurance executives say the challenge is often a mix of poor documentation, outdated contact details, and insufficient awareness among families about existing policies. Iyer suggested that a coordinated effort across regulators and databases could reduce these gaps dramatically.
He added that protection gaps — the difference between insured losses and actual economic losses — will persist unless industry participants prioritize simplicity, affordability, accessibility, and credible communication.
‘Insurance for All by 2047’ Requires Ground-Level Reforms
Iyer reiterated Irdai’s long-term goal of achieving “insurance for all by 2047”, coinciding with the centenary of India’s independence. For that, he said, the industry must set incremental goals every two to three years and push beyond urban markets, which still contribute 85 percent of all insurance business even after 25 years of liberalization.
“The need for insurance is not yet fully felt across much of India,” he said, noting that the sector must reckon with persistent skepticism, low financial literacy, and bureaucratic hurdles.
Rural Reach Still Limited
While major insurers have expanded aggressively into smaller towns, Iyer said the industry remains too dependent on metropolitan centers and, in some cases, on parent banks for distribution — a dependency the regulator may curb going forward.
Industry analysts say that resolving the issue of unclaimed funds is more than a financial housekeeping exercise. It is a trust-building intervention that could help families receive long-delayed benefits while pushing the sector toward a more transparent, consumer-focused approach.
