Bajaj Allianz Life has become the first insurer to implement the Bima-ASBA facility, aligning with the Insurance Regulatory and Development Authority of India’s (IRDAI) objective of simplifying premium payments and enhancing transparency. This initiative ensures that policyholders have greater control over their funds until the underwriting process is complete.
Functionality and Benefits of Bima-ASBA
Bima-ASBA allows policyholders to block an amount of up to ₹2 lakh in their bank account using UPI’s One-Time Mandate (OTM). The funds are debited only after the insurer completes the underwriting process and accepts the policy proposal. If the application is not processed within 14 days or is rejected, the blocked amount is automatically released, ensuring that the policyholder’s funds continue to earn interest until policy issuance.
Bajaj Allianz Life collaborated with payment service providers to introduce this facility, reinforcing its commitment to customer security and convenience. By eliminating upfront premium payments, Bima-ASBA removes concerns related to refunds, providing greater flexibility to policyholders. As of 31 December 2024, Bajaj Allianz Life manages assets worth ₹1.22 lakh crore and serves over 4.02 crore individual and group customers.
Regulatory Mandate and Implementation Timeline
On 18 February 2025, IRDAI issued a directive mandating that all insurers implement the Bima-ASBA facility by 1 March 2025. This mandate is part of the Master Circular on ‘Protection of Policyholders’ Interests’ released on 5 September 2024.
How Will It Work?
- Insurers generate a one-time mandate via UPI to block the required amount in the prospect’s bank account.
- The premium amount remains in the policyholder’s account until the insurer completes underwriting.
- If the insurer approves the policy proposal, the blocked amount is debited.
- If the proposal is rejected or not processed within 14 days, the amount is automatically released.
- The policyholder continues to earn interest on the blocked amount until it is debited.
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