Considering Rs 12 premium for 23.3 million policies, the premiums collected were roughly Rs 28 crore; but claims worth almost Rs 420 crore have been received.
The government will begin talks with general insurance companies and other relevant stakeholders over the course of the next few weeks on revising the price for Pradhan Mantri Suraksha Bima Yojana (PMSBY). The scheme, which offers Rs 2 lakh personal accident insurance at an annual premium of Rs 12 per annum, has been a loss-making proposition for insurers because of the unsustainable premiums.
Sources told Moneycontrol that insurers are likely to seek a hike in the premiums, to at least Rs 100-200 per annum. The cover period for the policy is June 1 of each year to May 31 of the subsequent year. A regular personal accident policy of a similar sum assured costs between Rs 200 and Rs 250 depending on the insurance company.
The personal accident scheme under the Pradhan Mantri Jan Suraksha Yojana, launched in May 2015, has 134.7 million subscribers as of March 26, 2018. According to data from the Jan Suraksha Yojana website, State Bank of India led the enrolments with 23.3 million subscribers. The insurers had received 20,984 claims during the same period which translates to Rs 419.68 crore worth of claims.
Considering Rs 12 premium for 23.3 million policies, the premiums collected were roughly Rs 28 crore - a huge loss for the insurers.
The losses under the segment have well exceeded 100 percent and hovering around 170-180 percent which means that for every Rs 100 collected as premium, Rs 180 is paid as claims. This has led to heavy losses for insurers present in this space.
“This portfolio has been bleeding and we are seeking a sustainable premium in such a way that makes this business viable for us on the one hand, while on the other hand customers also don’t feel a pinch,” said a senior general insurance executive.
PMSBY policies are sold through auto-debit facility of the bank accounts of individuals where the premiums are deducted from the account. There is an auto renewal of the product for the policyholders.
All individual (single or joint) bank account holders in the age 18 to 70 years in participating banks are entitled to join.
In case of incidents like road, rail and similar vehicular accidents, drowning, death involving any crime, the accident should be reported to police. In case of incidents like snake bite, fall from tree, the cause should be supported by immediate hospital record.
Natural calamities being in the nature of accidents, any death / disability (as defined under PMSBY) resulting from such natural calamities is also covered under PMSBY. While death due to suicide is not covered, that from murder is covered.