In ten years, PMJDY accident insurance covered just 12,500 claims.

Screenshot 2024 01 22 142024 PMJDY

In the last decade, the Pradhan Mantri Jan-Dhan Yojana (PMJDY) has been a transformative force in bringing financial inclusion to the masses. Among its offerings is an accident insurance cover tied to RuPay debit cards, yet recent data reveals a startling underutilization of this valuable benefit. This article aims to shed light on the low claims and the need for increased awareness among beneficiaries.

The Numbers Tell a Tale

Finance Ministry data exposes a significant gap in the utilization of accident insurance cover under PMJDY. Since the scheme’s inception in April 2014, only 12,539 claims have been received, despite the issuance of a staggering 34.71 crore RuPay debit cards to beneficiaries by December 6, 2023. The total disbursement under PMJDY amounts to Rs 93.5 crore.

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The Insurance Mechanism

PMJDY offers RuPay debit cards with an embedded accident insurance cover of Rs 2 lakh to account holders. However, Finance Minister Nirmala Sitharaman highlights that the insurance benefit is contingent on users conducting at least one successful financial or non-financial transaction within 90 days preceding the accident. This condition has implications for the claims process.

Challenges in Claiming

According to Subhash Chandra Khuntia, former chairman of the Insurance Regulatory and Development Authority of India (IRDAI), the primary reasons for the low number of claims are twofold. Firstly, there is a pervasive lack of awareness regarding the PMJDY RuPay Debit Card. Secondly, the nature of accident cover necessitates proof of the incident, adding a layer of complexity to the claims process.

A Rigorous Process

Khuntia emphasizes the need for improved awareness, as well as the challenges associated with proving that an incident qualifies as an accident. This rigorous process could explain the hesitancy among beneficiaries to file claims. As a consequence, a substantial number of account holders might not realize they have insurance coverage or may find the claiming process daunting.

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Context of Rising Road Accidents

The data becomes even more critical in the context of the escalating number of road accidents in India. Ministry of Road Transport and Highways (MoRTH) reports reveal that 4,61,312 accidents occurred in 2022, emphasizing the importance of insurance coverage for accident-related incidents.

A Call for Awareness

Experts, including R Gandhi, former RBI deputy governor, and Chandan Sinha, former executive director of RBI, concur that low awareness is a significant barrier.

They stress the necessity for more aggressive advertising and simplified explanations of the claiming process in understandable language. Financial and digital literacy campaigns are also deemed essential to bridge the information gap.

Advocacy for Increased Awareness

Rupam Roy, general secretary of the All India Bank Officers Confederation (AIBOC), advocates for more robust government-led campaigns to highlight the benefits of the PMJDY accident insurance cover.

Former RBI deputy governor R Gandhi echoes this sentiment, emphasizing the need for proactive advertising to reach the masses.

A Hidden Gem in Need of Unveiling

In conclusion, the accident insurance cover under PMJDY, while a commendable initiative, remains a hidden gem due to lack of awareness and perceived complexities in the claiming process.

As India grapples with an increasing number of road accidents, the need for beneficiaries to comprehend and utilize this valuable insurance cover becomes more pronounced. Government-led awareness campaigns, simplified explanations, and enhanced financial literacy efforts are crucial to unlock the full potential of this insurance benefit.

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