The Policyholders' Education and Protection Fund Regulations, 2026: Where Unclaimed Commercial Claim Money Goes

At its 137th Authority Meeting on 28 July 2026, IRDAI approved the IRDAI (Policyholders' Education and Protection Fund) Regulations, 2026, per the regulator's press release of 29 July 2026. The Regulations give operating form to a fund that until now existed only as a statutory shell: the fund constituted under Section 16A of the IRDA Act, 1999, a section that did not exist until the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 wrote it in.

The draft that preceded the approved Regulations appears on IRDAI's exposure drafts page under 31 July 2026, and IRDAI has separately published its response to the public comments received on that draft. Reading the approved instrument together with the comment-response document is worth the effort, because the response is where IRDAI drew the boundary of what the Regulations do and do not govern, and that boundary is the part that matters most to a corporate policyholder.

The headline framing in most coverage is a retail one: an education and protection fund, financed and governed under IRDAI's oversight, running awareness campaigns for individual policyholders. That framing is accurate as far as it goes. What it misses is that one of the fund's stated objectives is facilitating the tracing and recovery of unclaimed insurance amounts, and unclaimed amounts are not a retail-only phenomenon. Corporate policyholders generate them constantly, usually without anyone in the finance function noticing.

The 2025 Amendment Act is best known for raising FDI in insurers to 100% and for widening IRDAI's enforcement toolkit, changes covered in our post on the Amendment Act's commencement and compliance map. Section 16A was one of the quieter insertions: it constitutes a Policyholders' Education and Protection Fund at the statutory level, inside the IRDA Act itself rather than as a scheme or circular.

That placement matters for durability. A fund created by statute does not depend on the continuation of any particular master circular, and the regulations that operationalise it carry the weight of subordinate legislation made under the parent Act. The PEPF Regulations, 2026 are that operationalising instrument. As reported, the stated objectives of the fund are:

• promoting insurance awareness and literacy,
• strengthening grievance redressal,
• using technology for policyholder services, and
• facilitating the tracing and recovery of unclaimed insurance amounts.

Three of those four objectives read as retail-facing. The fourth is the one a CFO should stop on. India's insurers already sit on a large stock of unclaimed policyholder money, and the existing machinery for it (identification, disclosure, and eventual transfer out of the insurer's books) has operated for years under IRDAI's unclaimed-amounts framework. Section 16A now gives that machinery a statutory destination and a statutory constituency, which raises the odds that tracing, escalation and migration of stale balances become more systematic than they have been.

The most load-bearing sentence in the whole exercise is in the comment-response document, not the Regulations. In its published response to public comments on the draft PEPF Regulations, IRDAI stated that the timelines, scope and governance of unclaimed-amount recovery infrastructure are outside the ambit of the Regulations.

Read that carefully. The PEPF Regulations create and govern the fund. They do not rewrite the rules on when an amount becomes unclaimed, how long an insurer holds it, or through what infrastructure a claimant recovers it. Those questions continue to live in the existing unclaimed-amounts framework, and any change to them will come through separate instruments, not through the PEPF Regulations.

This split, fund inside the Regulations, recovery infrastructure outside them, is also why waiting for the PEPF regime to mature is the wrong posture. A finance team that treats the fund's creation as a signal to tighten its own reconciliation controls captures the benefit now. One that waits for the recovery infrastructure to be specified is betting on a process IRDAI has said this instrument does not govern.

Unclaimed insurance amounts are usually pictured as a retail problem: a matured life policy the nominee never claimed, a health refund that missed a closed bank account. Commercial programmes generate the same dead balances through different doors, and the amounts per incident are often larger.

Residual claim balances and salvage credits

A property or marine claim settles in stages: an on-account payment, then a final assessment after the surveyor's report. When the final figure lands above the on-account amount, the differential is payable to the insured. If the claim file has already been treated as closed internally, or the person who lodged it has left, the differential can sit with the insurer indefinitely. Multi-location policies make this worse, because the plant that suffered the loss and the head office that owns the banking details are different teams.

Salvage runs on the same delay. Where the insured retains damaged property, the agreed salvage value is deducted from the settlement; where the insurer sells the salvage and the arrangement entitles the insured to a share or an adjustment, that credit has to travel back. Salvage adjustments are settled weeks or months after the main claim payment, precisely when nobody is watching the file.

Refunds, endorsements and CD balances

Mid-term cancellations, sum-insured reductions, deletion endorsements on group covers and premium adjustments on declaration policies all generate refund instruments. A refund cheque issued to a company that has since changed its registered office, bank account or name is a textbook unclaimed amount in the making.

Group health and other cash-deposit-operated programmes leave residual balances in CD accounts after the policy period ends. Our post on CD account administration in group mediclaim covers the mechanics; the unclaimed-amounts angle is simply that a CD balance never swept back after the final endorsement reconciliation is corporate money sitting on an insurer's books with no live owner chasing it.

Under the pre-existing framework, unclaimed policyholder amounts already had a defined life cycle on the insurer's books, with disclosure obligations and, for amounts unclaimed over long periods, transfer out of the insurer entirely under the Senior Citizens' Welfare Fund mechanism. The direction of travel has been consistent for a decade: stale balances do not stay quietly recoverable forever.

The PEPF adds a statutory fund whose objectives include tracing and recovery of unclaimed amounts, which cuts both ways for a corporate. On one hand, better tracing infrastructure may eventually surface balances a company did not know it had. On the other, a statutory fund with a policyholder-protection mandate gives the system a legitimate destination for money nobody claims, and money with a legitimate destination migrates. Once a balance leaves the insurer's ordinary books, recovery stops being a phone call to your relationship manager and becomes a formal process against whatever infrastructure eventually governs it, infrastructure IRDAI has said the PEPF Regulations themselves do not define.

The asymmetry is stark. Before migration, recovering a residual claim balance costs an email with a bank mandate attached. After migration, it costs whatever the future recovery process demands, with documentation standards you cannot predict today. For a company with dozens of policies and a normal level of claims activity, the expected value of a proactive sweep is high and the cost is a few days of one analyst's time.

The exercise is a three-way match between your own records, your broker's records and each insurer's confirmation. Run it once as a cleanup, then fold it into the annual renewal cycle.

1. Build the policy universe. List every policy live at any point in the last five to eight years, across all group entities and locations, including lapsed and cancelled policies. Orphaned entities from M&A activity are where the oldest balances hide.
2. Pull the claims register against it. For every claim, record intimated amount, on-account payments, final settlement, and the date the last rupee actually hit a bank account you control. A claim marked closed in your register with no matching final credit in the bank statement is a live lead, and the claim-stage timelines in our post on policyholder protection entitlements for commercial insureds give you the reference points for when each payment should have landed.
3. Chase the post-settlement tail. Salvage adjustments, reinstatement premium refunds, and surveyor-fee reimbursements all settle after the main payment. Match each one to a receipt, not to a closure note.
4. Sweep refund instruments. Reconcile every cancellation and endorsement refund against bank credits. Flag any instrument issued to an old bank account, an old company name, or a stale address.
5. Close out CD accounts. For every expired cash-deposit programme, obtain a final CD statement from the insurer or TPA and demand the residual balance in writing.
6. Get written confirmations. Ask each insurer to confirm in writing any amounts held in your name as unclaimed or payable. Insurers already maintain unclaimed-amounts disclosures; a specific written request against your policy list is harder to answer with silence.

Document the output as a schedule of recovered amounts, amounts confirmed payable, and amounts disputed. That schedule is also useful evidence of financial control for statutory audit purposes, since unclaimed insurance receivables are assets the company has simply stopped tracking.

Three things are worth tracking from here. First, the final text of the PEPF Regulations as published, against the draft that appeared on IRDAI's exposure drafts page under 31 July 2026, to see how the fund's governance and financing settled. Second, any subsequent instrument that does specify the unclaimed-amount recovery infrastructure IRDAI kept outside this one, because that is where recovery timelines and procedures for migrated balances will eventually be written. Third, whether insurers' unclaimed-amounts disclosures start showing movement as the fund becomes operational.

None of that changes the immediate action. The balances a company can recover cheaply today are the ones still sitting in its insurers' ordinary books, identifiable from its own claim files, refund records and CD statements. Every renewal cycle that passes without a reconciliation adds another layer of staff turnover between the money and the people who remember it.

Running that reconciliation across dozens of policies means knowing what each wording and endorsement actually entitles you to at claim stage, from salvage treatment to refund mechanics. Sarvada gives commercial insurance brokers and corporate risk teams structured, searchable access to insurer policy wordings and the intelligence around them, so entitlements can be verified against the actual policy text rather than reconstructed from memory. Request Access to put that discipline behind your next claims and balance reconciliation.