The Insurance Regulatory and Development Authority of India (IRDAI) on Friday said it has reduced the capital requirement of insurance companies under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) by almost 50 per cent to encourage insurers to offer the policy.

“In order to facilitate more participation of insurers in PMJJBY, IRDAI has reduced the capital required to be held by insurers offering PMJJBY, by almost 50 per cent. “This move will enable life insurers to offer more policies under the scheme, and provide financial security

to the bottom of the pyramid of the Indian population through life insurance,” the regulator said in a statement on Friday.

“The easing of capital requirement by IRDAI will accelerate the penetration of life insurance in India, and will support the life insurers in achieving the target set by the government,” said IRDAI.

The regulator had earlier said that it has received representation from life insurers seeking relaxation in the solvency capital requirements for PMJJBY which has necessitated the need to revise solvency factors for efficient capital utilisation.

The announcement comes after the government had raised the premium for the flagship insurance schemes - Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) for economic viability.

While the rate for PMJJBY has increased from Rs 330 to Rs 436 annually, the same for PMSBY was increased from Rs 12 to Rs 20, effective from June 1, 2022.

Life insurance industry officials said that there was a need to evaluate the solvency requirements and premiums which did not factor in the changed underwriting risks following the Covid pandemic.

According to government data, the number of active subscribers enrolled in PMJJBY as of March 31, 2022, was 6.4 crore. Claims worth Rs 14,144 crore have been paid under the scheme as of March 31, 2022.