IRDAI introduces Bima-ASBA: Insurance Premium Payment Now Made Easier
The Insurance Regulatory and Development Authority of India (IRDAI) has introduced Bima-ASBA (Applications Supported by Blocked Amount), which has enabled the policyholders to block the required premium amount in their bank through UPI (Unified Payments Interface).
Effective from March 1, 2025, this newly introduced payment method is designed to make the premium payment process easier and smoother without any immediate deductions. The transfer of money from the individual to the insurer only takes place when the individual is applying for an insurance policy.
One-Time Mandate (OTM) through UPI
The one-time mandate (OTM) allows individuals to block the required amount in their bank accounts through UPI before the insurance application is accepted. The amount is deducted once the insurer accepts the application. If the proposal is rejected, the amount is transferred back to the customer.
How does Bima-ASBA work?
1. Filling out the form
While applying for an insurance policy, you will be asked to fill out a form that has the option to allow your bank to block the premium amount in your account.
2. Giving approval
Before blocking the amount in your account, The insurer will send a request to your bank, where you have to give approval. Once your request has been approved, your bank will block the premium amount and inform the insurance company.
3. Decision regarding the acceptance or rejection
The money remains blocked in your account for up to 14 days and cannot be used for anything else until the insurer accepts your application. However, the blocked amount may still earn interest during the 14-day period.
i) Acceptance of application
When the insurance company accepts your application, they will inform you and ask the bank to debit the blocked amount, which will transfer to their account.
ii) Rejection or cancellation of the proposal
In case the insurer rejects your application or if you request its cancellation, the blocked amount will be transferred back to your account within one working day.
According to the IRDAI circular on February 18, 2025, if the insurer does not process the application within 14 days, the blocked amount will be released automatically by the insurer through the partner bank.
According to the IRDAI circular on February 18, 2025, if the insurer does not process the application within 14 days, the blocked amount will be released automatically by the insurer through the partner bank.
Bima-ASBA offers a secure and efficient way to manage insurance premium payments using UPI while ensuring that funds are only debited when the policy is approved and processed by the insurer.
