The claims settlement under the low-cost life insurance scheme, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), is going great guns with over 75 per cent of the claims paid in a remarkably fast manner.
As the financial year winds to a close, it appears that the basic objective of increasing life cover as a means of social security has been met handsomely.
As on March 3, 2016, total subscriptions to the PMJJBY scheme stood at 2.95 crore. Out of this 19,877 claims have been reported and 16,281 have been paid. While 3,339 claims are outstanding, 257 claims were rejected according to the information available with bankers and insurers. Life Insurance Corporation (LIC) of India had the maximum share in the scheme paying almost 6,582 schemes out of the 8,728 claims received. SBI Life Insurance and IndiaFirst Life Insurance occupied the second and third slots respectively.
Life insurance coverage
Only a fraction of the population is covered by insurance. Life insurance penetration as a percentage of the Gross Domestic Product (GDP) is around 3.80 per cent despite the presence of 25 public and private insurers in India. With a twin purpose of expanding coverage and keeping it affordable, PMJJBY was launched in May, 2015. Under this, adults in the age group of 18 to 50 would be covered through a group insurance scheme linked to their bank accounts for a nominal premium of Rs. 330 an annum.
This was in a sense an attempt to replicate the success of the PM’s Jan Dhan Yojana which achieved near total success by bringing bank accounts to all willing families.
Insurers had good reasons to demur initially. Firstly, there was no actuarial experience based on which the rate of Rs. 330 was decided. Secondly, while the product was designed for the poor – it was not known whether they would indeed buy it. Thirdly, safeguards were still minimal — and there were no health check ups. There was therefore a legitimate fear of underpricing the risk, and the fear of fraudulent claims. Today, 10 life insurance companies have joined in, hoping to widen their reach and setting aside whatever misgivings they may have had initially.
