PM's Jan Suraksha Schemes Suffer from Fraudulent Claims

The Prime Minister’s Jan Suraksha insurance schemes have seen a number of claim rejections owing to fraudulent claims. Data show that out of the 25,398 claims filed with insurance companies, 800 were rejected for fraud.Launched in May 2015, the Jan Suraksha schemes, which include Jeevan Jyoti Bima Yojana and Suraksha Bima Yojana, extend the benefits of life and general insurance to policyholders. There is also a pension scheme called Atal Pension Yojana that is part of the Jan Suraksha schemes.

According to insurance officials, fraudulent claims include policies being bought for dead people or for conditions that are pre-existent leading to death.People in rural areas are not aware that proper documents are required to process claims, said an official with a large life insurer. “Hence, they are taking the help of agents, some of whom are fraudsters who make use of the policy and take the claims.”The plans have a cover of Rs 2 lakh each, with a premium of only Rs 12 a year for accident insurance and Rs 330 for the life product. Not all insurance companies in the private sector have become a part of this scheme because the cover cost is low though servicing costs are high. “It does not get business sense in the current premium rates,” said a senior official of a private life insurance company.  Insurance companies have said that while these schemes have enabled them to get business volumes owing to low premiums, pricing might not be sustainable in the long run. And, if premiums are increased, renewals might be a concern.

There are also concerns about the renewal rates since there have been cases of people not even knowing that their account has been debited for the policy. “Since the premium is low and some policyholders may not even have realised that their account has been debited, these policies might not be renewed in the next financial year,” said the head of underwriting at a mid-size private insurer.

Only some bank branches would handle claims, unlike in the case of other policies for which any branch can be approached. A public sector bank official said banks would have to keep some personnel ready to take care of claims.
As on March 16, a total of 29.5 million policies have been sold under the Jeevan Jyoti Bima Yojana and 93.9 million policies have been sold under Suraksha Bima Yojana. Here, State Bank of India leads in selling the most number of policies in both life cover and accident insurance cover.  From the next financial year, when the policy are renewed, there might be a revision in premiums based on claims data, said a senior executive with a life insurer.