The 2015 Budget Speech by Finance Minister Arun Jaitley mentioned about a couple of government backed life insurance schemes. Currently, about 20% of the entire population of the country has any life insurance and the intent of these was to increase that number.
Two years down the line, both the schemes Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY) and Pradhan Mantri Suraksha Bima Yojya (PMSBY) are knocking the doors of almost unsustainable claims to premium ratio. The PMJJBY has hit about 121% claims is to premium ratio only in its second year, while the PMSBY has even higher rates of 170% for the year 2016-2017.
The annual premium amount for both the schemes stands at Rs. 330 and Rs. 12 for PMJJBY and PMSBY respectively. The first year of operations saw the same ratio at 88% for PMJJBY and 121% for PMSBY. For reference, regular term and accidental insurances have a ratio at 40-45%.
This has sent the insurers into a frenzy and they are having talks with the government to increase the premium for PMSBY to about Rs. 75-100 for an increased coverage of Rs. 4 lacs as against the current 2 Lacs for PMSBY. But the government wants to keep an eye for a couple of years before making any changes to the premium prices.