Current Affairs:(Socio-Economic Issues)

PSU banks to tie-up with insurers for social schemes by June 1

After the Pradhan Mantri Jan Dhan Yojana (PMJDY) that had kept the banks busy, it is the insurance schemes (group-term and personal accident) announced in the Union Budget, which are to be offered to all account-holders, which are now in focus.
In the initial stage, the companies will tie-up with public sector banks first and later with private banks.

Details:

Public sector insurers like Life Insurance Corporation of India (LIC) have already tied-up with banks Dena Bank, Corporation Bank and IDBI Bank to implement the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJBY) for savings bank account holders.
In his budget speech, finance minister Arun Jaitley said that two new insurance schemes for the lower income groups will be launched. He had said that the Suraksha Bima Yojana, an accident insurance scheme of Rs 2 lakh sum assured with premium of just Rs 12 a year, would be launched. Prior to finalization of terms, insurance companies had indicated premium of Rs 24 to be a proposition viable. But the ministry prevailed to reduce to it to make it more attractive for the masses.
Similarly, there will be a Jeevan Jyoti Bima Yojana with a life insurance cover of Rs 2 lakh with an annual premium of Rs 330. This will be for those between the age-group of 18 years to 50 years. Jaitley said that these schemes will be part of a Universal Social Security Scheme in the country.
There would also be an Atal Pension Yojana (APY) that will be launched, also to be offered through banks. The modalities of this scheme are being worked out with Pension Fund Regulatory and Development Authority (PFRDA).
APY will be focussed on all citizens in the unorganised sector, who join the National Pension System (NPS) administered by PFRDA and who are not members of any statutory social security scheme. Under the APY, the subscribers would receive the fixed pension starting from Rs 1,000 per month, and in multiples thereof, subject to a ceiling of Rs 5,000 per month, at the age of 60 years. The monthly pension amount would depend on their contributions, which itself would vary on the age of joining the APY.
This scheme is open to all bank account holders who are not members of any statutory social security scheme. All bank account holders under the eligible category can join APY with auto-debit facility to accounts, leading to reduction in contribution collection charges.
Both public and private life and general insurers can participate in these schemes. Industry officials said that this would be similar to the other schemes where a tender will be floated and quotations will be sought. Insurers would require to apply state-wise for getting a particular scheme contract implementation in each state.
In the budget speech, Jaitley said that the premium for this scheme would only be direct debit from the bank accounts and only account-holders would be eligible for the product.
The country's insurance penetration (measured as premium as a percentage of GDP) has fallen to 3.9 per cent in 2013-14 compared to 4.0 per cent in 2012-13. With these schemes, insurers expect the penetration levels to increase. However, this is not a new phenomenon. With lower rates of renewal and lesser disposable income available to invest, insurers said that the penetration has come down.
While the PMJDY was only open to those people who did not have a bank account, these schemes are open to anyone who wishes to be part of the scheme. Further, these schemes would not be subsidised by the government and all claim-related services would be provided by the banks.
Insurers in talks on how to deal with individual claims in the life and non-life schemes. Designated bank branches will be set aside for these claims and there would at least 2-3 personnel in each branch handling these claims. Apart from this, renewal facilities would also be given by banks.

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