The Insurance Regulatory and Development Authority of India (IRDAI) has introduced a new facility to simplify premium payments for life and health insurance policyholders. Under this system, called Bima Applications Supported by Blocked Amount (Bima-ASBA), policyholders can block the required premium amount in their bank accounts. The amount will be automatically deducted once the policy is issued or the premium becomes due. This mechanism resembles the IPO application process, where funds are blocked and debited only after share allocation. Bima-ASBA also simplifies transactions with a UPI One-Time Mandate (OTM). “The govt is making a slew of changes to ease the insurance business and reduce the friction; this is one step towards making insurance purchase simpler and easier for users,” says Aditya Bagarka, head of strategy and innovation at Plum. So, how does it benefit you? “Until now, customers were first asked to pay the premium for the policies, and then the underwriting would happen. In case their policy was not accepted by the insurer, the premium would be refunded by the insurer. “This led to a lot of back-and-forth and unnecessary documentation for both clients and insurers. This will stop now, with payment debited only on issuance/acceptance of risk,” Bagarka notes. How are insurers preparing to make this change? “Insurers will have to upgrade their systems to accept ASBA payment methods; this should be rolled out as per timelines defined by the regulator,” he adds.