Bima ASBA: Insurance For All By 2047
The government of India has been actively promoting the integration of digital technologies into various sectors through initiatives such as Digital India, Make in India, and Startup India. Insurance is one such industry that is receiving the government’s support to employ digital tools. In fact, research had suggested earlier that the increase in internet users in India will lead to a significant rise in adoption of digital users in the country, with the numbers reaching 900 million by 2025.
Digital methods have appealed customers due to its convenience. From policy purchases to filing claims, everything can be done with just a few clicks. When the entire process is digital, people find making digital payments more convenient. This shift not only reflects the increase in the adoption of new technologies in various sectors but also serves as a response to changing customer preferences. Incorporating digital payments into insurance will only make it more accessible and user-friendly .
Bima ASBA via UPI is one of the convenient options to make first premium payments for your life insurance policies. Using UPI mandate for premium payment ensures quick and seamless transactions. .
How Bima-ASBA is Leading the Change
Considering all the above-mentioned reasons, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced a new UPI-based payment system through OTM for the payment of insurance premiums called Bima-ASBA which will be in effect from March 1, 2025. This new system is applicable to life and health insurance policies; it'll allow you to block a specific amount of funds in your bank account for insurance payments. This amount will not be debited until your policy proposal is approved and the transactions will be carried out only after receiving your consent. In case the application gets rejected, the blocked funds in your account will be released within one working day .
Bima-ASBA aims to streamline the payment process for life and health insurance policies. Unlike traditional methods where the amount is debited for a premium upon completing the proposal form, Bima-ASBA requires you to authorise the blocking of funds for premium payments in your account through the UPI-OTM for up to 14 days . The maximum amount that can be blocked in your account is Rs.2 lakh . Since there is no upfront payment the money will remain blocked in your account till such time that underwriting decision is made or for a period of 14 days whichever is earlier.
The IRDAI has mandated all insurance companies to offer Bima-ASBA facilities to their policyholders. The insurance company will seek help from its partner bank to send a request to your bank to block the required amount in your account. Your bank will ask for your approval and will proceed to block the funds and notify the insurer once you agree. When the application gets approved by the insurer, they will inform you and request your bank to debit the blocked funds. The transfer will take place only upon receiving your consent .
With Bima-ASBA, while you can ensure that sufficient funds are available in your account for premium payments, it makes policy issuance secure and safe with the UPI-OTM method. This payment mechanism makes transactions seamless and hassle-free. Moreover, using Bima-ASBA’s digital payment facility promotes transparency, communication and safety.
FAQs
How does Bima-ASBA work?
Bima-ASBA allows you to block funds in your bank account through UPI’s One Time Mandate or OTM. The insurance company will review your application. Once approved, the blocked amount will be debited to the insurer's account. Upon rejection or cancellation, the blocked funds in your account will be released within one working day.
Is Bima-ASBA mandatory?
Although IRDAI has mandated all insurance companies to provide Bima-ASBA as a payment option for life and health insurance policies, you, as a policyholder, are free to choose your mode of payment .
What happens if my policy application is rejected?
In case your policy proposal gets rejected or cancelled, the blocked amount in your bank account will be released within one working day.
Can UPI OTM (One-Time Mandate) be supported on RuPay Credit Cards?
Yes, UPI OTM can be supported on RuPay Credit Cards, allowing users to set up recurring payments directly through their credit card.
What is UPI OTM?
UPI OTM or One Time Mandate is one of UPI’s features that enables users to block funds in their bank account. It is a one-time setup, which helps you ensures timely and secure payment option for your advance payments, life insurance policy payment etc.
Who should I contact if I have problems with Bima-ASBA?
You can contact your insurance company for issues related to Bima ASBA payments and, bank or UPI service provider for assistance with any queries related to transaction.
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