Insurance companies are seeking a twofold rise in the government-backed low-cost insurance scheme Pradhan Mantri Suraksha Bima Yojana (PMSBY), which has seen a claim ratio of 200% in the first three years of operations.
The PMSBY, introduced in 2015, which provides a cover of INR200,000 (US$3,125) for accidental death and INR100,000 for permanent disability, has attracted the enrolment of 130 million persons and has settled 14,400 claims of the nearly 19,000 received since it was launched, reported Times of India.
Mr G Srinivasan, Chairman of New India Assurance — the country's largest non-life insurer, said: "The INR12-premium was not reviewed earlier as the government had said that they would wait for three years. Considering the 200% claims ratio, we feel that a price of INR35 would be appropriate." This would be roughly three times the existing price or an increase of 200%.
Mr Srinivisan said that last week's FY2019 Budget measures to distribute microinsurance through Jan Dhan Yojana accounts will increase non-life insurance penetration. Jan Dhan Yojana is a government scheme to increase financial inclusion by encouraging Indians, particularly those in rural areas, to open bank accounts.
In his Budget speech on 1 February, Finance Minister Arun Jaitley also said that the government will work to cover all poor households under the PMSBY and the Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY), which is a one-year term life policy available to people in the age group of 18 to 50 years ( life cover up to age 55) having a savings bank account who give their consent to enable auto-debit of the premium from their bank accounts. Life cover of INR200,000 is available at a premium of INR330 per annum.
He said that the National Health Protection Scheme proposed in the FY2019 Budget would also boost health insurance as insurers were best placed to provide the cover. In his Budget address last week, Mr Jaitley said that the government would launch a flagship National Health Protection Scheme to cover over 100 million poor and vulnerable families (approximately 500 million beneficiaries) providing coverage of up to INR500,000 per family per year for secondary and tertiary care hospitalisation.
Mr Srinivasan said that insurers have over 10 years of experience in managing mass health insurance schemes like Rashtriya Swasthya Bima Yojana, which was introduced in 2008 for those who live below the poverty line. “Despite initial losses, I can say that schemes are moving in a viable model," he said.
Pointing to other developments that would boost insurance business, Mr Srinivasan said that the Real Estate (Regulations & Development) Act, passed in 2016, represents a big opportunity for non-life insurers as it has made it mandatory for builders to purchase title insurance. "We are launching this cover soon. While initially it will be purchased by builders, we expect a market among individuals and banks," he said.
Another new opportunity is in liability insurance. Following the introduction in 2016 of the Insolvency and Bankruptcy Code, there is demand for insurance cover from insolvency resolution professionals who manage insolvent companies on behalf of creditors.