Bima-ASBA: The Insurance Regulatory and Development Authority of India (IRDAI) has launched a new premium payment system for policyholders known as Bima-ASBA (Applications Supported by Blocked Amount). This initiative is designed to assist policyholders in ensuring they have adequate funds in their bank accounts for premium payments via the Unified Payments Interface (UPI). The primary objective is to streamline the premium payment process for life and health insurance.
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The Bima-ASBA facility will be accessible starting March 1, and IRDAI has mandated that insurance companies implement this system. The concept of maintaining funds in accounts through ASBA or UPI has already been effectively utilized by retail investors in the stock market. This insurance-ASBA mechanism aims to alleviate cash flow issues for individuals seeking life or health insurance, thereby preventing interruptions in premium payments during the policy approval process.
It is not uncommon for potential policyholders to encounter financial constraints after initiating the insurance purchase process. IRDAI anticipates that those opting for insurance-ASBA will successfully secure insurance coverage. This initiative aligns with the broader goal of extending insurance protection to all citizens of the country. Under this system, the premium funds will remain in the policyholders’ bank accounts until the policy is officially issued, ensuring the safety of their money.
Customers can maintain a specified amount in their accounts through a one-time mandate (OTM) via UPI. Should the insurance policy application be declined, the funds will be returned to the account holder; however, access to these funds will be restricted until that point.
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