The Union Budget to be presented on 1 February is likely to refine government-backed insurance schemes, namely, a personal accident policy and a term insurance plan. This could include some changes in the product structure and revisions to the pricing.
The Jeevan Jyoti Bima Yojana or term insurance offers a cover of INR200,000 (US$3,146) with an annual premium of INR330. Similarly, the Pradhan Mantri Suraksha Bima Yojana or personal accident scheme offers INR200,000 cover for accidental death for an annual premium of INR12. These insurance schemes, along with Atal Pension Yojana, were launched in May 2015 to provide affordable basic insurance covers for Indians. The products are sold solely through bank branches which earn a small commission.
There have been concerns about the slow pace of enrollment into the schemes. The personal accident policy has had more than 133 million policyholders while the term insurance policy has 53 million policyholders, reported Moneycontrol.
"Banks could also be encouraged to sell more of the policies by offering a better incentive under the scheme. Some announcements are likely," said a senior official associated with this development.
A senior private sector insurance company chief said:“We have sought certain tweaks in the products including some upwards premium revision as well as measures to curb fraudulent claims. We have been assured of measures to deal with this."
Fraudulent claims have been reported, especially from the cooperative and regional rural banks. Insurers said that claims have been rejected for reasons including fraudulent documents produced and incorrect declaration of facts. These could be tackled through changes in underwriting structure by the Budget announcements.