Jan Suraksha policies can be social sector obligation for insurers

This comes as a big relief to insurers who had sought clarification from Insurance Regulatory and Development Authority of India on this issue

The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY/life insurance product) and Pradhan Mantri Suraksha Bima Yojana (PMSBY/personal accident policy) will now be considered a part of social sector obligations for insurers.

This comes as a big relief to insurers who had sought clarification from Insurance Regulatory and Development Authority of India (IRDAI) on this issue.

“The regulator has said that the two insurance plans under the Jan Suraksha scheme can be part of our social sector obligations since there is no subsidy involved,” said a senior general insurance official.

Insurance schemes that involve a subsidy by the government are not made part of social sector obligations since the government pays a part of the premium.

As per latest data, PMJJBY has enrolled 27.1 million individuals, while PMSBY has enrolled 80.1 million individuals.

The life insurance plan has an annual premium of Rs 330 while the personal accident plan has an annual premium of Rs 12.


 

  As per a new draft of IRDAI, social sector obligations of insurers will be based on how long they have been in the industry.

In the IRDAI (Obligations of Insurers to Rural and Social Sectors) Regulations (draft), the regulator has said ‘social sector’ includes unorganised sector, informal sector, economically vulnerable or backward classes and other categories of persons, both in rural and urban areas.

As per rules, every insurer, who begins to carry on insurance business, has to ensure that it undertakes social, rural sector obligations, during the financial years indicated.

In the social sectors, for all insurers (life, non-life, health), it starts with 0.5 per cent of total business procured in the preceding financial year to 5 per cent for 10th year and above. Total business for the purpose of these regulations is the total policies issued in case of individual insurance and number of lives covered in case of group insurance.

It is anticipated that more number of private insurers will now write policies under Jan Suraksha schemes now that it will be considered part of rural/social obligations.