Prime Minister Narendra Modi will launch three social security schemes, including Rs 2 lakh accident cover at a premium of just Re 1 per month, in Kolkata on May 9.
Banks and insurance companies are scrambling to provide 40 crore account holders in banks — insurance, pension, and personal accident cover by May 9 — a stiff target set by the government under the Pradhan Mantri Suraksha Bima Yojana (PMSBY), on the eve of the Modi led NDA completing one year in office.
State owned insurers are on a overdrive to tie- up with both public sector and private banks to ensure that the scheme works. “The Finance Ministry is following up with frequent meetings with the CMDs of banks and insurers,” said a senior official involved in the process.
Life Insurance Corporation has already joined hands with 8-9 banks to provide life insurance cover. New India, the largest non life company have already tied up with 7-8 banks such as Union Bank, Bank of India and Karnataka Bank while National Insurance will partner with SBI.
“The Ministry has set up a war room with the supervision of senior officials to monitor developments,” said the official who did not wish to be named. The insurance schemes follow the PM’s Jhan Dhan Yojana in which banks opened over 14 crore accounts and mobilised deposits of over Rs 10,000 crore.
The government has asked the banks and public sector insurers to tie up with each other to cover 40 crore account holders (out of total 80 crore) by May 9. “The government has given a very stiff target whose failure will end with penalty,” the official said.
Banks will eventually use the proposed common technology platform to market such products.
Insurers are targeting a premium of over Rs 400 crore with almost zero expenses. Bank will be doing the paper work. These schemes are aimed at providing affordable universal access to essential social security protection in a convenient manner linked to auto-debit facility from the bank account of a subscriber.
These schemes were announced in the Budget by Finance Minister Arun Jaitley on February 28. The two insurance schemes, Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), would provide insurance cover in the event of death by any cause, death or disability due to an accident. In contrast, the pension scheme, Atal Pension Yojana (APY), would address old age income security needs.
The success of the Jan-Dhan scheme has prompted the government to carry out a similar exercise in insurance- a segment in which India is severely under-penetrated.
Insurance in India: A closer look
* Economic Survey says that the insurance penetration in India has grown from 2.3 per cent (with life 1.8 per cent and non-life 0.7 per cent) in 2000 to 3.9 per cent (life at 3.1 per cent and non-life at 0.8 per cent) in 2013
* Emerging markets like Brazil and China have life insurance penetration of 2.2 (estimated) and 1.6 (provisional) respectively
* In 2013-14, the life insurance industry recorded a premium income of Rs 3.14 lakh-crore as against Rs 2.87 lakh-crore in the previous financial year, registering a growth of 9.4 per cent
* While private-sector insurers posted 1.4 per cent decline in their premium income, Life Insurance Corporation recorded 13.5 per cent growth during the period
* But Swiss Re says overall insurance penetration in India (percentage of premiums to gross domestic product), which was surging consistently till 2009, has been seeing a gradual decline.
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