Incurring huge losses under PMSBY, insurers urge govt to hike premium

The Pradhan Mantri Suraksha Bima Yojana (PMSBY), which offers accidental insurance cover, has incurred losses of more than 350% till December 6 in the current financial year, data from the jansuraskha website reveal. The scheme, launched in May 2015, has seen claims of over 200% in 2017-18 and 347% in 2018-19.

As on December 6, the total number of persons enrolled for the scheme stood at 170.3 million, while the number of claims addressed was 36,152, data from jansuraksha.gov.in show. Given the premiums paid per person is Rs. 12, insurers would have received a total premium of Rs. 204 crore. However, since the claim per person is Rs. 2 lakh, the amount disbursed was Rs. 723 crore for 36,152 persons.

With claims rising every year, insurers have asked the government to increase the premium under the scheme. The main insurers are state-owned general insurers like New India Assurance, National Insurance Company, Oriental Insurance Company and United India Insurance, which together have a market share of 70-80%. Among private insurers, the players are Bajaj Allianz General Insurance and HDFC ERGO General Insurance.

“The claims ratio continues to remain at elevated levels and we have asked the government to increase the premium to Rs. 35-39. However, as of now, we haven’t got any indication from the government on the changes in the premium…” said a top official from one of the public sector insurance companies. The cover under this scheme is for one year starting from June to May 31.

This scheme was projected as a path-breaking one to provide affordable accidental insurance to the citizens. The premium amount has to be paid by May-end every year for renewal and policies are linked to beneficiary bank accounts. Under the said scheme, the risk coverage available is Rs. 2 lakh for accidental death or permanent total disability and Rs. 1 lakh for permanent partial disability. According to the data from the jansuraskha.gov.in, 17.03 crore enrolments have been done under the PMSBY, while total number of claims disbursed stood at 36,152 as on December 6, 2019. Som the premium received by the insurers would be at Rs. 204 crore, while claims paid by them stands at around Rs. 723 crore.

At the end of 2018-19, 32,176 claims amounting to Rs. 643.52 were settled by the insurers, while claims settled in 2017-18 and 2016-17 were Rs. 328.6 crore and Rs. 188 crore, respectively. “Though overall numbers look small in terms of claims, if more people participate and claims remain at the same level, it might hurt us. We hope that the government understands our point of view and increases premiums so that the claims ratio comes down,” said another senior official from a top insurance company.

Source: Financial Express