IRDAI Launches Bima-ASBA

The Insurance Regulatory and Development Authority of India (IRDAI) has launched a new payment mechanism called Bima-ASBA. This initiative aims to simplify premium payments for life and health insurance policies. Starting from March 1, 2025, policyholders can use the Unified Payments Interface (UPI) to block funds in their bank accounts. This ensures a smoother transaction process without immediate debits.

What is Bima-ASBA?

Bima-ASBA stands for Applications Supported by Blocked Amount. It allows policyholders to secure funds in their bank accounts while waiting for the insurer’s decision on their application. The funds remain available but are blocked from use until the insurer either accepts or rejects the proposal.

How Bima-ASBA Works

The process is user-friendly. When applying for an insurance policy, customers can opt for Bima-ASBA. The insurer requests the bank to block the premium amount. Upon customer consent, the bank blocks the funds. These funds stay in the account but cannot be accessed. If the insurer approves the application, the amount is debited. If rejected, the funds are released back to the customer.

Benefits for Policyholders

Bima-ASBA allows policyholders to manage their finances better by blocking funds without immediate deductions. If an application is rejected, the funds are returned quickly. Additionally, while funds are blocked, they may continue to earn interest, providing extra financial benefits.

Implementation Guidelines for Insurers

All insurers must implement Bima-ASBA by March 1, 2025. They are required to include a standard declaration in proposal forms. Insurers can collaborate with multiple banks to facilitate the blocking of funds. It is also essential that the one-time UPI mandate is valid for up to 14 days.

Optional Facility

Bima-ASBA is an optional facility. Insurers cannot reject a proposal solely because a prospect chooses not to use this payment method. Other payment options will still be available, ensuring flexibility for policyholders.

Regulatory Context

This initiative is part of IRDAI’s ongoing efforts to protect policyholders’ interests. It aligns with the Master Circular on ‘Protection of Policyholders’ Interests’ issued in September 2024. Bima-ASBA is designed to enhance transparency and security in insurance transactions.

Month: Current Affairs - February, 2025

Category: Government Schemes Current Affairs