Under Bima –ASBA facility, transfer of money from the prospect to the insurer happens only when policy is issued. Amount towards insurance premium will be debited from the customer’s bank only after the insurer decides to accept the proposal. One-time manadate through UPI will  be created with a valid period of maximum 14 days or till the date of the underwriting decisions, whichever is earlier

Hyderabad: Indian insurance regulator IRDAI has unveiled Bima –ASBA(Bima Application s Supported by Blocked Amount), by which it has allowed insurers one-time mandate for blocking the amount towards premium through Unified Payments Interface(UPI mandate) for issuances life and health policies.

Issuing a detailed circular on Tuesday, the IRDAI has said insurers are mandated to offer Bima-ASBA facility from March 1 to its prospect s for life and health insurance policies.

Similar to a method adopted for an IPO (Initial Public Offer), where a subscriber authorises his/her bank to block funds in his/her account, this feature allows an insurance customer to block funds in their bank accounts for specific transactions, ensuring availability of funds while deferring actual payments. This service is useful in multiple scenarios where the customer prefers to authorize a block on funds without immediate debits facilitating smoother transaction.

Under  Bima –ASBA facility, transfer of money from the prospect to the insurer happens only when policy is issued. Amount towards insurance premium will be debited from the bank only after the insurer decides to accept the proposal. One-time manadate through UPI will  be created with a valid period of maximum 14 days or till the date of the underwriting decisions ,whichever is earlier.

In case, the insurer does not accept the proposal, the amount will be unblocked and will be released for the use of the customer.

The insurer will partner with multiple banks and will have appropriate  systems and processes in place    and necessary contractual agreements with the partner.  

Based on representations received by the IRDAI from the insurers towards bringing about operational ease and to facilitate smooth transactions of payments of premium, a facility of the UPI One Time Mndate(OTM) is enabled to be used by insurers, said the IRDAI.