Mumbai, January 13: Insurance industry is expecting positive move in the upcoming budget and wants the government to focus on bringing more people under the ambit of life, health and general insurance.
According to latest Insurance Regulatory Development Authority of India (IRDAI) annual report India’s life insurance penetration in 2018 is 2.74 per cent and non-life is 0.97 per cent and overall industry is 3.70 per cent.
Kamlesh Rao, MD and CEO, Aditya Birla Sun Life Insurance says, “ In a country with inadequate social security, protection offered by life insurance is inevitable. However, lack of its penetration is plaguing the industry. We expect the government to focus on bringing more people under the ambit of Life Insurance, promote long-term savings and encourage capital formation.”
To encourage first time insurance buyers and women to ensure their lives and savings Women comprise roughly 48 per cent of the total population. In 2018-19, women bought 103 lakh life insurance policies and contributed Rs 36,525 crore of premium (individual life insurance new business).
Rao adds, “Introducing separate deduction of Rs 50,000 for first time life insurance buyers and an additional capping of Rs 50,000 for someone purchasing a pure protection (term) plan will put life insurance on fast track. Encourage women to insure their lives and savings with extra tax benefit for women policyholders will be a significant step. And relaxation of section 10(10)(D), where minimum sum assured is required to be 10 times of annual premium will be a desirable move.”
The penetration of non-life insurance, which is still low at a 0.97 per cent compared to developed economies, can be increased with the support of the government. Considering the rising healthcare cost in the country has increased the basic premium for many of the tax payers in the middle-age and senior citizens.
Warendra Sinha, MD & CEO, IFFCO-Tokio General Insurance says, “The current limit for health insurance benefit as per Section 80D should be enhanced for individuals to Rs 75,000 from the current level of Rs 25,000. For senior citizens, who are 60 years or above, the current maximum limit is Rs 50,000. The limit for senior citizens should also be accordingly increased to Rs 1 lakh, as the basic premium rates are higher for this age category.”
To build a home, an individual allocates one’s entire life’s savings. The government’s Housing for All’ agenda is providing a fillip to home building. However, natural calamities like floods, cyclone have caused immense losses to most of the dwelling units and its contents. If the building along with contents of the house are protected with an adequate home insurance, the financial burden could have been reduced.
“I feel that like section 80D for health insurance, a separate section for deduction should be available for home insurance, covering both building and its contents. There is a need to protect this asset against natural calamities like floods and cyclones which are occurring with increasing frequency every year”, remarks Sinha.
Industry experts also want measures to bring parity between pension products offered by life insurers and NPS. Lowering rate of GST at 12 per cent (with input tax credit benefit) will be beneficial for both policyholders and companies. These measures will pave the growth path for the life insurance sector, besides increasing the security net of the nation’s people at a very low cost. The removal of GST will reduce the cost of a policy, making insurance affordable for individual policyholders.