Wednesday, February 6, 2013

HC issues notices to GOI & IRDA on unclaimed funds of Rs 5000 Crore with Insurance Cos.

New Delhi: The Delhi High Court has issued notices to the Union of India through the Department of Financial Service, Ministry of Finance and the Insurance Regulatory & Development Authority (IRDA) alleging financial irregularities by various insurance companies that are sitting over above Rs 5000 crore as unclaimed funds for discontinued, dormant and lapsed policies based on a writ petition filed by the Society for Consumers’ and Investors’ Protection

According to Dr G S Sood, President SCIP, "The problem of unclaimed funds is a very serious issue plaguing not just the insurance industry but the entire financial world -- considering the fact that nearly Rs 26,000 crores are lying unclaimed in banks and provident fund accounts."

The petition filed by advocate Gautam Das on behalf of Society for Consumers’ and Investors’ Protection (SCIP) a Consumer Advocacy Group recognized by the Ministry of Corporate Affairs, Securities and Exchange Board of India (SEBI) and Telecom Regulatory Authority of India (TRAI) -- came up for hearing in the court of Justice Rajiv Shakdher. The Society is the only NGO in India working for Investor Protection that is accepted as a member by the World Federation of Investors.

In a petition under article 226 of the constitution of India-- the Society for Consumer's and Investor's Protection has sought the High Court’s direction to IRDA to formulate guidelines for systematic accounting of the actual amount lying unclaimed with various private and public, life and non life insurance companies, provide details of insured -- who are the beneficiaries of the said amount.

Alternately the petitioner has prayed that the government may consider enacting legislation for dealing with unclaimed funds and property like that in New Zealand, Canada and California to protect the unclaimed money of the public from being misused, siphoned through vague, hazy funds created in fictitious names

The Society for Consumers’ & Investors’ Protection (SCIP) is involved in wide activities for consumer protection and investor education at the national level. It regularly take up consumer and investor grievances with concerned companies and regulators besides organizing investor education programs and workshops to update consumers and investors about the latest rules relating to investors protection and other developments having an impact on them.

In the process of its investor awareness programmes and workshops, the Petitioner was flooded with request from individuals and organizations who complained about unclaimed money running into thousands of crores lying with various public & private insurance companies for some reason or other like failure of the insurance companies to search, find and making payment of the said amount to the legally competent claimants.

The society hence filed an RTI and was shocked to learn from the IRDA reply that the total amount of unclaimed money of policy holders as on 31st March 2011 was Rs. 4453.27 Crores for Life Insurance Companies and Rs. 679.25 Crores for Non- Life Insurance Companies.

The case comes up for next hearing on 26 April 2013