Government-owned insurance companies, mainly, are incurring losses of 80-100% on the prime minister’s accident insurance scheme, Pradhan Mantri Suraksha Bima Yojana (PMSBY).
Government-owned insurance companies, mainly, are incurring losses of 80-100% on the prime minister’s accident insurance scheme, Pradhan Mantri Suraksha Bima Yojana (PMSBY). Compared with a premium of Rs 161 crore collected this year, insurance firms have disbursed claims of around Rs 290-320 crore. While they are planning to ask for doubling the premium levels for now — from Rs 12 per annum to around Rs 20-30 — even this may not be enough since similar insurance sold by these insurance companies can cost up to Rs 80 for a similar Rs 2 lakh cover albeit for individuals, and around Rs 45-50 for group insurance. A total of 13.4 crore persons have availed the PMSBY and, till March 5, a total of 20,249 claims were received; of these, 15,727 were settled. Launched in 2015, the insurance scheme gives a Rs 2-lakh cover for accidental death/permanent disability and Rs 1 lakh for partial disability. “In the past three years, claims from PMSBY have remained in the same range and the government had said that premium rate revision would be taken after three years,” said a senior official of a leading insurance company.
The official added, “At the meeting with the ministry of finance next month, we will ask for an increase in premium to Rs 20-30 per annum. The claims ratio has remained in the same range for the previous financial year and a hike in premium rates will give some relief to us,” said a senior official of a leading insurance company. Another official of an insurance firm said, “Though overall numbers look small in terms of claims, if more people participate and the claims remain at the same levels, it will hurt our industry. We hope that government understands our point of view and increases the premiums next time.” The scheme, launched in May 2015, was seen as a ground-breaking step to provide affordable, universal access to personal accident cover at a nominal cost to all Indians. The premium amount has to be paid by May-end every year for renewal and the policies are linked to the bank accounts of the beneficiaries. While several private players provide cover under PMSBY, state-owned general insurers including New India Assurance, National Insurance Company and United India Insurance together command a share of 70-75%. Huge under-pricing also applies to other insurance schemes such the life insurance under the Pradhan Mantri Jeevan Jyoti Bima (PMJJBY). In the case of the PMJJBY, while LIC charges a premium of Rs 1,529 per annum to a 20-year-old for a 20-year cover for Rs 6 lakh — going up to Rs 6,273 for a 45-year-old — the PMJJBY charges a mere Rs 330 for everyone between 18 and 50. Compared with a premium of Rs 1,028 crore for life policies in FY17, its second year of operations, the claims were for Rs 1,249 crore, giving it a claims ratio of over 120%. In the case of the yet-to-be-launched health insurance scheme announced in the Budget, while the government has estimated Modicare will cost around Rs 1,000-1,200 per family per year, 30 non-life insurance firms in the country have written to the finance ministry saying the premium needs to be at least Rs 2,500 for the scheme to be viable.