M Saraswathy & Beena Parmar Moneycontrol News
New enrollments in the government's flagship insurance schemes under the Pradhan Mantri Jan Suraksha Yojana have slowed down by up to 20 percent when compared to the last couple of years.
The slowdown has resulted in the Department of Financial Services stopping its weekly disclosure of enrollment data since April.
"There is no significant increase in the enrollments and hence regular disclosures have been discontinued," said an official close to the development.
This will mean that no monthly or weekly data pertaining to the government-sponsored insurance scheme will be disclosed to the public any more.
However, participating insurance companies still maintain regular data on the number of policies sold.
The personal accident scheme (Pradhan Mantri Suraksha Bima Yojana) and term insurance scheme (Pradhan Mantri Jeevan Jyoti Bima Yojana) were launched in May 2015.
Both policies have a sum assured of Rs 2 lakh each and need to be renewed after one year. But their premiums are low at Rs 12 and Rs 330, respectively.
In the period immediately after the launch of these schemes, banks were focusing on enrolling more policyholders aggressively. In the first five months of the schemes' launch, around 120 million policyholders were enrolled.
The total enrollments for the two insurance schemes still remain high due to their auto-renewal feature, which allows the premium to be debited straight from the policyholder's bank account on annual basis.
As on April 23, there were 135 million subscribers under PMSBY and 53.3 million subscribers under PMJJBY.
Due to the fact that this is an auto-renewal scheme, once an individual has subscribed to the policy, the premium is deducted on an annual basis. Public data on enrollment is not available after that period.
Prime Minister Narendra Modi launched the Jan Suraksha Yojana in May 2015 to provide all citizens access to basic insurance and pension at a low cost.
Apart from the two insurance schemes, the initiative also consists of a pension product, Atal Pension Yojana.
Banks, however, maintain that renewal rates are high. They added that tweaks in the scheme to allow late entry have also been beneficial.
"Of course, it will be lesser than the time when it kicked off. But the number of beneficiaries have been increasing steadily. The renewal rate has been above 90 percent. The schemes, in fact, are modified from one year to quarterly premium even if you enroll in the last month," said VS Khichi, Executive Director, Bank of Baroda.
For the banks, auto-renewal ensures they do not have to make repeated calls to the customers to get them to renew their policies.
Regular insurance products do not have auto-debit facilities and hence, the intermediaries (like banks and agents) send reminders to customers for policy renewal.
Insurance companies, on the other hand, have been pressing for an increase in premiums, but the government has not budged to make sure that they stay affordable.
A senior banker said that not every customer may opt for it because of its low coverage. "We have not stopped offering it but the customers are also opting for the other policies. We also have to do business for our own insurance products," the banker said.
Several banks are also promoters of insurance companies and policy sales help them earn a significant amount of fee income. They earn high double-digit commissions for doing so, unlike for pushing government schemes.
However, public sector banks had been given a mandate by the government to make PMSBY and PMJJBY available to all account holders.
Dinabandhu Mohapatra, MD & CEO, Bank of India said: "We have to take care of the requirement and are following due process. So we are continuing to offer the government policies and we are also offering our products."
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