Karnataka High Court directs IRDAI to ensure Insurance Companies transfer unclaimed amounts to Senior Citizens Welfare Fund

The Karnataka High Court on Wednesday directed the Insurance Regulatory and Development Authority of India (IRDAI) to ensure that all insurance companies transfer unclaimed amounts to the Senior Citizens Welfare Fund, in line with the master circular issued by the regulatory body in 2017. .The order was passed by a Bench of Acting Chief Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum."Respondent 3 (IRDAI) shall ensure that in future also the master circular (issued in 2017) is being complied with by insurance companies and periodical reports be also called from all insurance companies regarding compliance with the master circular issued by it only to ensure that the amount is being transferred to the senior citizens welfare fund as provided in the master circular issued by Respondent 3," the Court directed..The Division Bench also highlighted the rationale behind legislature enacting the Senior Citizens Welfare Fund Act, 2016. ."The Government of India was aware of the huge amount available with insurance companies and Senior Citizens Welfare Fund Act, 2016 was enacted as per finance act 2015, which mandates transfer of unclaimed amount to the senior citizen welfare fund after a period of ten years. The Act has been enacted to promote the welfare of senior citizens and for such other purposes, as is specified in the Act," the Court said..The petition moved by the Legal Attorneys and Barristers submitted that there are various insurance companies, which have collected premium amounts from a large number of citizens. However, after the maturity period/death of persons insured occurs and there are unclaimed policies/amounts..Counsel for the IRDAI refuted the submission, stating that the Government of India has enacted the Senior Citizen Welfare Fund Act 2016, as a part of the Finance Act 2015. It mandates transfer of unclaimed amount to senior citizen welfare fund, after a period of 10 years and the same is being done by all the insurance companies..In this regard, the Court, in its order recorded, "The petitioner firm has filed the present petition showing serious concern about unclaimed amount/unclaimed policies and the amount lying with insurance companies. As per their contention an amount of Rs 15167 is lying with other insurance companies. However, the aforesaid amount is seriously disputed by the respondents. Fact remains that petition is field with noble objective and to ensure that unclaimed amount is transferred to senior citizen welfare fund.".Further, the Court was told that IRDAI is monitoring the transfer of funds in terms of Senior Welfare Funds Rules 2016 and the insurance companies have transferred Rs 81.65 crore in March 2018 and Rs 398.66 crore in March 2019. It is a continuous process, the Court was told. .The Court was further apprised that IRDAI has issued a master circular on July 25, 2017, which is in respect of unclaimed amount of policy holders. As per the same, the amount is being transferred to senior citizens welfare fund and there is a complete mechanism under the master circular in respect of unclaimed policies/unclaimed amounts.The regulator is keeping a strict watch over various insurance companies and the master circular is being strictly enforced. If there is any violation of the master circular, the same will attract penal provisions including punishment under Section 102 of Insurance Act 1938, the Court was further informed. .Pursuant to noting these submissions, the Court said, "The Government of India, in exercise of powers conferred under the Finance Act of 2015, has formulated the Senior Citizen Welfare Fund 2016 Rules, which specifies the entities which are required to transfer unclaimed amount to the senior citizens welfare funds. The same is being done by insurance companies as reflected by the reply filed by IRDA.".With these observations, the Court disposed of the plea.