Insurance penetration, less than five per cent of the gross domestic product (GDP), could now get a boost with two new schemes launched in the Budget for individuals from lower-income groups.
Insurers, however, are looking for more clarity on the pricing of the schemes before bidding for the contracts. During his Budget speech on Saturday, Finance Minister Arun Jaitley announced the two schemes — Suraksha Bima Yojana, an accident insurance with Rs 2 lakh sum assured and premium of merely Rs 12 per year; and Jeevan Jyoti Bima Yojana, a life insurance cover of Rs 2 lakh and an annual premium of Rs 330.
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Jeevan Jyoti Bima Yojana will be for those aged between 18 and 50 years. Jaitley said these schemes would be part of a universal social security scheme. Both public and private life and general insurers can participate in these. Reacting to the announcement, the chief executive of a large life insurance company said the modalities of the scheme would have to be looked into before the industry places formal bids. “The tenure of the contracts, the government’s contribution and claims redressal will also be looked into, apart from the annual pricing.”
Industry officials said this would be similar to the other schemes where a tender would be floated and quotations sought. Those with the lowest annual premium quoted will be accepted. Insurers would require to apply state-wise for getting a particular scheme contract implementation in each state.
Munish Sharda, managing director and chief executive officer, Future Generali India Life Insurance, said these measures would surely help higher insurance penetration and aims at providing a safety net of pension scheme to all Indians.
The Pradhan Mantri Suraksha Bima Yojana for accidental death insurance will be available to people in age group of 18 years to 70 years with bank accounts (since the premium will be auto-debited from the account). Here, the premium will be Rs 12 per annum, and the coverage would be Rs 2 lakh for accidental death and full disability and Rs 1 lakh for partial disability.
“With these schemes, Jaitley has ensured the Indian populace is not only adequately insured against unforeseen circumstances but also has enough corpus to enjoy life after retirement,” said Miranjit Mukherjee, chief financial officer, Tata AIG General Insurance.
This scheme will be offered by all public sector general insurance companies and all other insurers who are willing to join the scheme and tie up with banks for this purpose. The Pradhan Mantri Jeevan Jyoti Bima Yojana (life insurance cover) will be available to people in the age group of 18 years to 50 years and having a bank account. People who join the scheme before completing 50 years can, however, continue to have the risk of life cover up to the age of 55 years, subject to payment of premium.
Here, the premium will be Rs 330 per annum with coverage of Rs 2 lakh in case of death due to any reason. The scheme will be offered by Life Insurance Corporation of India and all other life insurers who are willing to join the scheme and tie up with banks for this purpose.
“We have seen in the government-sponsored health scheme, the pricing in bidding process has not been viable in some cases. Hence many private players will enter these new schemes only if pricing is sustainable,” said the underwriting head at a mid-size private general insurer.
In the area of health insurance, Rashtriya Swasthya Bima Yojana (RSBY) offers provides cashless health insurance cover of Rs 30,000 a year to Below Poverty Line families (a unit of five persons) in the unorganised sector. RSBY was earlier extended to sections such as rickshaw pullers, rag pickers, mine workers, sanitation workers, and auto rickshaw and taxi drivers. Beneficiaries need to pay Rs 30 per family at the time of enrollment.
The scheme already covers street vendors, beedi workers, domestic workers, building and other construction workers and the Mahatma Gandhi National Rural Employment Guarantee Scheme workers who have worked more than 15 days during the previous year.
The Centre pays 75 paise of every rupee of policy premium for the Rashtriya Swasthya Bima Yojana and the states pay the rest. It is not clear on how much will be the Centre's share in the new insurance schemes and on what basis will insurers be selected.