In yet another step towards creating a cashless society, the government has introduced a slew of measures to encourage digital transactions. One such incentive is discounts on premiums of up to 10% on insurance policies offered by public sector insurers.
Public sector insurance companies will provide incentive, by way of discount or credit, up to 10% of the premium in general insurance policies and 8% in new life police of Life Insurance Corporation sold through the customer portals, if payment is through digital means, said a Finance Ministry tweet.
The government has asked state owned LIC to offer discount up to 8% on new insurance policies. There will be no discounts on renewal of policies. The move is expected to benefit direct investors. Agents can sell life insurance policies online by registering with LIC Indias portal.
Similarly, non-life general insurers can offer up to 10% discounts on premiums. However, the government has not clarified as to which policies (existing or new) will get such discounts. Typically, non-life insurance policies have one-year contract. However, health insurance policies have pre-determined benefits like waiting period and coverage for pre-existing diseases. Hence, renewal plays a key role in health insurance policies. This move will benefit health insurance policyholders who have a due date post December 8.
The senior official of a private sector general insurance company told Cafemutual that the bulk of premium payments happen through cash and cheque. Only about 10% premium payments are done online, he said. In his view, the move will push sales of insurance policies through online distributors like web aggregators and online insurance brokers since they have the infrastructure to cater to tech savvy clients.
When asked if the governments measures will give an edge to public sector insurers when it comes to having a pricing advantage, he said that private insurers already provide cash back and discounts by tying up with payment wallet services like Paytm and Freecharge.