IRDAI/PP&GR/CIR/MISC/37/02/2025
Circular
February 18, 2025
To
All Insurers and Distribution Channels
Sub: One-time Mandate for blocking the amount towards premium through Unified
Payments Interface (UPI mandate) for issuance of life and health insurance
policies- Bima-ASBA
1. Reference is drawn to Master Circular on Protection of Policyholders’ Interests
numbering IRDAI / PP&GR / CIR / MISC / 117 / 9 / 2024 dated 5th September
2024 Part A (II) (4) and Part B (II) (3) for Life insurance policies and Health insurance
policies, respectively wherein, the following is specified as regards “Payment of
premium / Premium deposit:
i. Premium is required to be paid only after the insurer communicates the
decision of acceptance of the proposal.
ii. Risk Cover shall commence only after receipt of premium.
iii. No premium deposit/ proposal deposit is required to be paid to the insurer
along with the proposal form except in case of policies issued basis
declaration of good health where risk cover commences immediately on
receipt of premium. There should not be scope for either short or excess
collection of premium.
iv. Insurers shall ensure that explicit consent is obtained from the prospect
/policyholder for deduction of amount towards premium payment from
bank account.”
2. In this context, based on the requests/ representations received by IRDAI from the
insurers towards bringing about operational ease in meeting with this requirement,
to facilitate smooth transactions of payment of premium, a facility of the Unified
Payments Interface (UPI) One Time Mandate (OTM) is enabled to be used by
insurers. This feature allows users 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
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block on funds without immediate debits, facilitating smoother transaction
processing.
3. Under this facility called the “Bima Applications Supported by Blocked Amount
(Bima - ASBA)” transfer of money from the prospect to the insurer happens only
when insurance policy is issued. In this facility, insurers can offer one-time mandate
for blocking certain amount through Unified Payment Interface (UPI) in the bank
account of the concerned prospect. Amount towards insurance premium will be
debited only after the insurer decides to accept the proposal. In case the insurer
does not accept the proposal, the amount shall be unblocked and shall be released
and shall be available at the disposal of the prospect.
4. Insurers are mandated to offer Bima - ASBA facility to its prospects for life and
health insurance policies.
5. Insurers shall provide an option in the proposal form, through a standard
declaration, whereby the prospect may authorize the insurer to block the amount
in their bank account through UPI. Both Life insurance and General Insurance
Councils, within one week from the date of issuance of this circular, shall issue
standard declaration to be included in the proposal for taking the authorization.
6. Bima-ASBA shall be at the option of the prospect. No proposal shall be rejected for
the reason that the prospect has not opted for Bima-ASBA.
7. This premium payment facility, Bima-ASBA, shall be offered to the prospects in
addition to the existing options available for making payment of premium as
specified in Regulation 16 (2) of IRDAI (Protection of Policyholders’ Interests,
Operations and Allied Matters of Insurers) Regulations, 2024.
8. The insurer shall partner with multiple banks and shall have appropriate systems
and processes in place and necessary contractual agreements with the partner
banks so that:
i. One-time mandate through UPI shall be created:
a) only in favour of the insurer.
b) prospect authenticates through one-time mandate, as per the
applicable provisions and laws.
c) with a valid period of maximum 14 days or till the date of the
underwriting decision, whichever is earlier.
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ii. The amount so blocked under Bima-ASBA shall be unblocked:
a) automatically after expiry of 14 days from the date of initial blocking of
funds.
b) within one working day from the date of non-acceptance of the proposal
form;
iii. The prospect shall be kept informed at every stage of the Bima-ASBA i.e.
blockage of the amount, initiation of debit (whether in part or in full) and the
unblocking of the amount so that timely information on blocking and
unblocking of funds is provided to the prospect.
iv. No charges or any additional amount shall be levied for creation of such
mandate from the prospect.
v. The partner bank shall share with insurer, the details of the One-Time Mandate
created in favour of the insurer, on a monthly basis.
9. Obligation of the Insurer
i. The amount of premium blocked shall be specific to the proposal form made
by the prospect. In case of multiple proposal forms, Bima-ASBA facility shall
be offered separately for each proposal form.
ii. Blocking of the amount shall only be on the basis of the explicit consent of the
prospect in the proposal form. In case the amount of initial premium blocked
is more than the premium to be collected by the insurer due to its underwriting
decision, then the insurer shall only collect the reduced amount through this
facility.
iii. Where the premium to be charged is more than the blocked amount, then the
insurer shall use the facility to modify such mandates through one-time
consent/authorization from the prospect.
iv. Modification in the original mandate shall be allowed only one time and the
time period of 14 days for such modification shall be from the date of original
mandate for blocking the fund.
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v. Blocking of the amount shall only be done after taking necessary consent from
the prospect as per applicable provisions and laws.
vi. In case the prospect intends to cancel the proposal form submitted, before the
underwriting decision of the insurer, the prospect shall make the request
through the various modes provided for this purpose by the Insurer. Insurer
shall accept the request and release the blocked amount within one day from
the day of request.
vii. The risk shall commence from the date of acceptance of the proposal
irrespective of the debit from the account of the prospect, in case Bima-ASBA
is utilized.
viii. Insurer shall maintain all necessary records and information that confirms
compliance about the mandates created in its favour and shall be available
for inspection by the Authority.
ix. The insurer shall be responsible for any error or omission on usage and
operation of Bima-ASBA.
10. Procedure for One-time Mandate through UPI
i. The proposal form submitted to the insurer either directly or through
distribution channel shall have duly filled in standard declaration opting for
Bima-ASBA facility for premium payment which permits blocking of premium
amount in the bank account of the prospect;
ii. The insurer shall send the request for blocking the premium amount to the
prospect’s bank through any one of its partner banks utilizing the facility offered
by NPCI;
iii. On obtaining express consent from the prospect, the prospect’s bank shall
block the funds in the bank account of the prospect and inform the partner
bank through UPI. The partner bank shall then pass on this information to the
insurer who shall further pass on to the prospect;
iv. The amount so blocked towards premium shall continue to remain in the bank
account of the prospect without being debited. Such blocked amount shall not
be available to the prospect for any other use till such time the underwriting
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decision is made or 14 days whichever is earlier and may continue to earn
interest as per the extant legal provisions applicable to banks;
v. The said blocked amount shall be debited from the bank account only in case
of acceptance of the proposal by the insurer and after communicating the
decision of acceptance to the prospect;
vi. Upon the insurer underwriting / acceptance of the proposal, the insurer shall
instruct the partner bank to debit the premium amount from the blocked
amount in the bank account of the prospect and transfer the same to the bank
account of the insurer;
vii. If the proposal is rejected or if the prospect cancels the proposal, the insurer
shall send an instruction to the partner bank to release the blocked amount.
The blocked amount is then unblocked by the prospect’s bank without any
deduction;
viii. In any case, if the insurer does not process the application within a period of 14
days, the blocked amount will be automatically unblocked through the partner
bank by the insurer.
11. The insurers are allowed to use Bima-ASBA mechanism for blocking of premium up
to the limit specified by NPCI from time to time.
12. At present, the facility of Bima-ASBA is extended to individual policyholders.
13. All insurers shall go live and offer Bima-ASBA facility to the prospect or customer
on or before 1st March 2025.
14. This has the approval of the Competent Authority.
R K Sharma
Chief General Manager
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