The new BIMA-ASBA framework introduced by the Insurance Regulatory and Development Authority of India (IRDAI) is designed to significantly improve the insurance premium payment process and, in doing so, address issues related to unclaimed amounts.

BIMA-ASBA, is set to revolutionize insurance premium payments and significantly reduce the mounting problem of unclaimed funds within the sector. By introducing a “block and pay” mechanism, this innovative system promises to bring greater transparency and efficiency to insurance transactions.

Effective Date: 

The new guidelines effective from March 1, 2025, state that only the necessary premium amount will be blocked and debited once the policy is issued.

How BIMA-ASBA Works:

  • Blocked Amounts:
  • Payment Upon Policy Issuance:
    • The actual transfer of funds occurs only when the insurance policy is issued.
    • If the policy is rejected or canceled, the blocked amount is automatically released back to the policyholder.
  • Benefits:
    • Reduced Unauthorised Deductions: This system minimizes the risk of unauthorized deductions and delayed refunds.
    • Increased Transparency: Policyholders have greater control over their transactions.
    • Reduced Unclaimed Amounts: By ensuring that funds are only transferred when a policy is issued, the likelihood of discrepancies and unclaimed amounts is reduced.
    • Interest Earning: The money remains in the customers account, so it has the potential to continue to earn interest.

Impact on Unclaimed Amounts:

  • A significant contributor to unclaimed amounts in insurance is the discrepancy between when premiums are taken and when policies are issued.
  • By making the process of premium payments more transparent, and by only transferring funds when the policy is issued, the new BIMA-ASBA framework will decrease the likeliness of those discrepancies.
  • Also, the automatic return of blocked funds, when a policy is not issued, will also reduce the build up of unclaimed funds.

The implementation of BIMA-ASBA is expected to have a far-reaching impact, clearing the path for a more organized and customer-friendly insurance ecosystem. As the framework gains traction, it is poised to significantly reduce the burden of unclaimed funds and foster greater confidence in the insurance industry.

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He has contributed in ICAI, ICSI and MCCI and other various Newsletters. He is also a speaker at various platforms including seminars / webinars.