Insurance companies are preparing to transfer millions of euro from customers' unclaimed life assurance policies into a State fund to be used for a range of social and charitable projects.
An estimated €10 to €40 million in dormant policies has been identified as unclaimed by insurance firms and financial institutions.
However, it is unclear how much exactly will be transferred to State coffers following the expiry of a March 31st deadline for customers to claim their policies.
Insurance firms have two weeks to transfer all unclaimed funds to the National Treasury Management Agency, where the money will eventually be used for a range of social projects to be decided by the Government, in consultation with an independent board.
Despite the deadline, policyholders or their beneficiaries will still be able to come forward at any time and reclaim the full amount they are entitled to.
Over the past year insurance firms have been required to attempt to make contact with holders of unclaimed policies to inform them of the new initiative. However, they were not required to write to customers where the value of the policy was less than €500.
Under the Government scheme three types of life assurance policies will be affected:
Fixed-term policies, with a lump sum payable at the end of the term, which have been unclaimed for five years;
Open-ended policies, which do not have a fixed term, where there has been no contact from the policyholder for 15 years;
Personal pension policies, or those not linked to an employer's pension scheme, which have been unclaimed for five years.
Policies will not be considered as "unclaimed" where the policyholder is continuing to pay premiums.
While there have been varying estimates of the size of the funds that will be transferred, Government sources say it is impossible to calculate the final value of the money due to the ongoing reactivation of life assurance policies.
The move to transfer funds from life assurance policies follows the success of the dormant accounts fund, which saw €175 million transferred from financial institutions to the State last year. As a result, around €30 million a year is to be spent on projects for disadvantaged and marginalised communities.
However, the process of dispersing funds has been hit by controversy in recent months after the Government was accused of trying to take control of the funds from an independent board set up to distribute the money.
Opposition parties said the decision to give the final say over allocations to the Government instead of the Dormant Accounts Disbursements Board would leave Ministers with a slush fund for projects they favoured.
The Government has said that it wants to make use of the existing Civil Service structures to allocate the money, while the board would retain an advisory function.
