The Insurance Regulatory and Development Authority of India (IRDAI) has released a consultation paper outlining the proposed regulatory framework for the newly established Policyholders’ Education and Protection Fund (PEPF), a dedicated fund aimed at strengthening policyholder awareness, protection, and support mechanisms across the country.
The regulator has invited comments and suggestions from insurers, industry stakeholders, consumer groups, and members of the public on the proposed regulations by July 13, 2026. The consultation process is intended to gather feedback before finalising the framework, ensuring that the fund effectively supports insurance literacy, grievance redressal, policyholder assistance services, and the recovery of unclaimed insurance benefits across the country.
What is the Policyholders’ Education and Protection Fund?
The Policyholders’ Education and Protection Fund (PEPF), with an initial corpus of ₹800 crore, was constituted by IRDAI in March 2026 following the enactment of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. The amendment introduced Section 16A in the IRDAI Act, 1999, mandating the creation of a dedicated fund to promote insurance awareness, protect policyholder interests, and support various policyholder-centric initiatives.
According to the regulator, the fund is intended to serve as a long-term institutional mechanism for improving insurance literacy and enhancing consumer confidence in the insurance sector.
Sources of the Fund
The proposed framework states that the PEPF will receive contributions from multiple sources, including:
Grants and donations from the Central Government and State Governments
Contributions from IRDAI
Amounts collected through penalties under insurance laws
Other sources as may be specified through regulations
The fund will be administered and utilised by IRDAI for policyholder education, protection, and related activities.
Key Proposals Under the Consultation Paper
IRDAI has proposed a structured framework to ensure the effective utilisation of the fund. The investment income generated from the ₹800 crore corpus is expected to support several initiatives aimed at benefiting insurance consumers.
1. Nationwide Insurance Awareness Programmes
The regulator proposes to use the investment income from the corpus to conduct insurance literacy and awareness campaigns across the country. These initiatives are expected to improve understanding of insurance products, rights, responsibilities, and claim processes among policyholders.
2. Strengthening Grievance Redressal Systems
The consultation paper also emphasises improving grievance support mechanisms to ensure faster and more effective resolution of policyholder complaints.
3. Technology-Enabled Policyholder Services
IRDAI has proposed leveraging technology to enhance consumer services. This may include:
Digital platforms for policyholder support
Technology-based grievance systems
Proactive alerts during natural disasters and emergencies
Communication tools to assist policyholders during critical situations
4. Recovery of Unclaimed Insurance Amounts
Another significant proposal is the creation of systems that help consumers trace and recover unclaimed insurance benefits and amounts that remain unpaid or unclaimed.
Fund Management Committee Proposed
To ensure proper governance and oversight, the consultation paper proposes the establishment of a Fund Management Committee.
The committee would be responsible for:
Administration of the fund
Governance and oversight
Monitoring utilisation of funds
Reviewing performance and outcomes
Ensuring transparency and accountability
Why the PEPF Matters
The proposed Policyholders’ Education and Protection Fund addresses some of the longstanding challenges that continue to affect insurance awareness and customer protection in India.
Low insurance awareness:
Complex policy language:
Limited awareness of rights:
Unclaimed insurance benefits:
Need for stronger consumer support:
Technology-driven services:
A large section of consumers still lacks adequate understanding of insurance products, coverage, exclusions, and policy benefits.
Many policyholders find insurance terms and conditions difficult to understand, leading to confusion during purchase and claims.
Consumers are often unaware of their rights, available grievance channels, and the steps to resolve disputes.
A significant amount of insurance proceeds remain unclaimed due to lack of awareness, incomplete information, or difficulties in tracing policies.
Faster grievance resolution and proactive assistance can improve customer confidence and trust in insurers.
Digital tools, alerts, and self-service platforms can help policyholders access information and assistance more easily.
What This Means for Policyholders
The proposed PEPF has the potential to strengthen consumer protection and improve insurance awareness across the country. Greater insurance awareness: Nationwide literacy programmes can help consumers better understand insurance products, benefits, exclusions, and claim procedures.
Improved grievance support:
Better access to information:
Timely communication during emergencies:
Recovery of unclaimed benefits:
Higher consumer confidence:
Support for insurance penetration:
Stronger redressal mechanisms can help policyholders resolve complaints more efficiently.
Technology-enabled services can make policy-related information and assistance more accessible.
Proactive alerts during natural disasters and emergencies can help policyholders take necessary action quickly.
Dedicated systems to trace and recover unclaimed insurance amounts can benefit policyholders and nominees.
Improved awareness and support mechanisms can strengthen trust in the insurance ecosystem.
Better-informed consumers are more likely to purchase, renew, and effectively use insurance products.
Conclusion
The proposed PEPF regulations mark an important step towards strengthening consumer protection in the insurance sector. With a corpus of ₹800 crore, the fund has the potential to significantly improve insurance awareness, grievance redressal, technology-enabled services, and recovery of unclaimed benefits.
If implemented effectively, the initiative could play a crucial role in improving trust, enhancing financial literacy, and supporting the development of a more inclusive insurance ecosystem in India.
Consultation paper - https://irdai.gov.in/document-detail?documentId=9589282
Frequently Asked Questions
What is the Policyholders’ Education and Protection Fund (PEPF)?
The Policyholders’ Education and Protection Fund (PEPF) is a dedicated fund established by IRDAI to promote insurance awareness, strengthen policyholder protection, support grievance redressal, and improve consumer services in the insurance sector.
What is the corpus of the PEPF?
The Policyholders’ Education and Protection Fund has been created with an initial corpus of ₹800 crore.
Why has IRDAI introduced the PEPF?
IRDAI has introduced the PEPF to improve insurance literacy, protect policyholder interests, strengthen grievance support systems, and enhance consumer awareness across the country.
Under which law was the PEPF established?
The PEPF was established under Section 16A of the IRDAI Act, 1999, introduced through the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
How will the PEPF be funded?
The fund will receive contributions from government grants, IRDAI contributions, penalties collected under insurance laws, and other sources specified through regulations.
How will the PEPF benefit policyholders?
The fund is expected to support insurance awareness programmes, improve grievance redressal systems, develop technology-enabled services, and help policyholders trace unclaimed insurance amounts.
Will the PEPF help recover unclaimed insurance money?
Yes. The consultation paper proposes creating systems that help policyholders and nominees trace and recover unclaimed insurance benefits.
What technology initiatives have been proposed under the PEPF?
The proposed initiatives include digital support platforms, technology-based grievance systems, proactive alerts during natural calamities, and communication services for policyholders.
What is the role of the Fund Management Committee?
The proposed Fund Management Committee will oversee the governance, administration, utilisation, and performance monitoring of the Policyholders’ Education and Protection Fund.
When can stakeholders submit comments on the consultation paper?
IRDAI has invited comments and suggestions from stakeholders and the public until July 13, 2026.
Will the PEPF increase insurance premiums?
The consultation paper does not propose any increase in insurance premiums to fund the PEPF. The corpus is proposed to be built through specified contributions and other permitted sources.
Is the PEPF applicable to all types of insurance policies?
The fund is intended to support policyholder education and protection across the insurance sector, benefiting policyholders of life, health, and general insurance products.
