Many private non-life insurers appear to be shying away from the Modi government’s newly launched ambitious social security scheme offering Rs 2-lakh accident cover at an annual premium of just Rs 12, citing low pricing and the growing incidents of accidental deaths.
Those having signed up for the scheme include ICICI Lombard, Bajaj Allianz, Reliance General, Universal Sompo, Iffco-Tokio and Future Generali, but players like SBI General, HDFC Ergo, Liberty Videocon and some others have openly expressed their decision to keep away.
“Only six private sector general insurers have confirmed their participation in the Prime Minister’s Surakhsa Bima Yojana (PMSBY) so far,” a Finance Ministry official told PTI.
The scheme provides an accident cover of Rs 2 lakh for all savings bank account holders in the 18-70 age group for a premium of as low as Re 1 a month or Rs 12 per annum.
The scheme was initially slated to close by May 31, but it is now likely to be extended till August 31, Finance Ministry sources said.
A total 28 non-life insurers are registered with the sector regulator IRDAI (Insurance Regulatory and Development Authority of India), a majority of which are private players.
The public sector entities include New India Assurance, National Insurance Company, Oriental Insurance Company, United India Insurance and Agriculture Insurance Company of India.
SBI General Insurance, whose parent State Bank of India has over 25 crore account holders, has opted out, while SBI has tied up with state-run National Insurance Company.
“Providing a Rs 2-lakh cover for just Rs 10, which is the basic premium excluding Rs 2 for other costs incurred by an insurer, is not at all economical. Even our existing personal accident covers for Rs one lakh has a premium of Rs 25, but are still loss-making as accidental deaths are increasing now,” an SBI General official said.
HDFC Ergo has also preferred to sit out, while its group entity HDFC Bank had to tie up with state-owned United India Insurance.
The scheme allows banks to tie-up with any insurer of their choice.
Those having signed up are, however, bullish about the prospects, while a few others like Tata AIG and Cholamandalam MS General Insurance are looking for their bank partners.
There has been a massive rise in road/industrial accidents in the recent past, which calls for an urgent need to expand the accident insurance coverage in the country.
According to the Statistics and Programme Implementation Ministry, incidents of accidental deaths increased considerably by over 54 per cent to more than four lakh during the ten years between 2003 and 2013.