Insurance cos knock on Irdai door seeking more time to implement Bima-ASBA

Insurers seek Irdai's nod for more time to implement Bima-ASBA, citing early deadline; feature allows policyholders to block premiums until underwriting is completed

Insurance companies have approached the Insurance Regulatory and Development Authority of India (Irdai) and sought an extension in implementing its new payment mechanism Bima-ASBA (Applications Supported by Blocked Amount), which aims to simplify and streamline the payment process for health and life insurance policies, said multiple sources aware of the development.

 

In mid-February, Irdai introduced the Bima–ASBA facility and mandated insurers to offer this facility, which will enhance convenience and reduce payment-related delays, to the policyholders by March 1. A majority of insurers have yet to go live with this feature.

 

The companies have initiated discussions with the UPI facility providers to implement Bima-ASBA. They are working towards rolling out the feature soon, sources said, adding that the regulator’s March 1 deadline was too early and prevented most insurers from meeting it.

 

The insurance companies have approached Irdai through the Life Insurance Council. They seek an extension but have not specified any timeline. The insurance companies are hopeful that the regulator will give them additional time to implement the feature.

 

While insurance companies are required to offer this facility, it remains optional for customers. Modeled after UPI-linked ASBA for initial public offering (IPO) applications, Bima-ASBA allows the premium amount to be blocked in the customer’s account until the insurer completes underwriting— evaluating factors such as health, income, and other parameters— before deciding to issue the policy or reject the application.

 

In September 2024, Irdai issued detailed guidelines on protecting policyholders' interests, stating that the premium should be paid only after the insurer communicates its decision on accepting or rejecting the policy proposal. Bima-ASBA was introduced by Irdai to help facilitate the implementation of this rule.

 

With Bima-ASBA, policyholders can use UPI’s one-time mandate (OTM) to authorise the blocking of a specified amount (up to ₹2 lakh) in their bank account. To offer this facility, insurance companies have to partner with multiple banks, set up the necessary systems, and establish contractual agreements.

 

The one-time mandate (OTM) through UPI will have to be created in favor of the insurer and used to authenticate the customer. The mandate will be valid for up to 14 days or until the underwriting decision is made, whichever comes first, in compliance with applicable laws.

 

The amount under Bima-ASBA shall be unblocked automatically after the expiry of 14 days from the initial date of blocking funds and one working day from the date of non-acceptance of the proposal form.

 

In cases where the premium to be charged is more than the blocked amount, the insurer will have to use the facility to modify the mandate through one-time consent or authorisation from the prospect. In case the insurer does not process the application within 14 days, the blocked amount will be automatically unblocked through the partner bank by the insurer.

 

Bajaj Allianz Life Insurance said it had gone live with Bima-ASBA, where policyholders can opt for UPI’s OTM and authorise the blocking of amounts up to ₹2 lakh in their bank account via UPI.