Money & Banking

Low-cost insurance schemes: Centre expects over 98% renewals this year

G Naga Sridhar Hyderabad | Updated on January 11, 2018 Published on May 17, 2017

pmjjby

Feedback from some of the beneficiaries has been quite encouraging, says top official

The Centre is expecting over 98 per cent renewals for its low-cost insurance and social security schemes — Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) — this year.

It has already prepared an action plan in this regard. “We are following this up on a daily basis. We are hoping to cross last year’s renewals for PMJJBY and PMSBY at 96 per cent and 98 per cent respectively,” Bhumika Verma, Joint Director (Insurance), Department of Financial Services, told BusinessLine on Wednesday.

The renewal drive has already been undertaken by banks and insurers in the first week of this month, to publicise and make subscribers aware of the need to keep sufficient balance in their bank accounts for auto debit of the renewal premium.

The renewal premium for PMJJBY and PMSBY is ₹330 and ₹12, respectively. The premium amount will be debited from the account during May 21-31.

Over 12.50 crore policies subscribed under the schemes will be automatically renewed if the bank accounts have the required balance. PMJJBY offers a renewable one-year life cover of ₹2 lakh to all savings bank account-holders in the age group of 18-50 years, covering death due to any reason, for a premium of ₹330 per annum and being administered by the Life Insurance Corporation of India and other private insurers. PMSBY provides a renewable one-year accidental death-cum-disability cover of ₹2 lakh for partial/permanent disability for those in the age group of 18-70 years for a premium of ₹12 per annum through public sector general insurance policies.

Some concerns

There are some concerns too for the insurers. “While the scheme has seen increasing awareness and gained good traction in terms of numbers of enrolments, the pricing, however, is not commensurate with the risk. The loss ratios of insurers under PMSBY are in excess of 200 per cent,” Abhijeet Ghosh, Head–Health Insurance, Bajaj Allianz General Insurance, said.

Most of the claims being received pertained to death, followed by partial disability.

The government, however, is optimistic. “Our feedback from some of the beneficiaries has been quite encouraging. As such insurance penetration is low in India and these schemes will surely be gaining more traction in future,” Bhumika Verma said.

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Published on May 17, 2017
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