Budget 2012: Increase in Service Tax will affect Insurance Policyholders: KG Krishnamoorthy Rao, MD, Future Generali

Post Budget reaction – KG Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance Co Ltd.

 

The optimistic growth rate projected for the economy is good news for General Insurance since it has lot of dependency on the growth of manufacturing sector.

Budget has projected increased investments in infrastructure including highway development projects.  This also should help in generating premium for the general insurance sector.

We need to wait for more details on the service tax negative list to see whether some of the aspects like payment of health insurance claims to hospitals are likely to attract service tax. Increase in service tax by 2% increases the insurance cost for the customers.

Apart from this the budget appears to be neutral for general insurance sector.

The tax exemption on preventive Medical tests upto Rs.5000 would help increase conscious about health, hence creating opportunities for Health Insurance amongst customers. This should help increase the market and get first time buyers into the Health Insurance market.

The upper limit for the 20% tax bracket has been increased from Rs.8 lakh to Rs.10 lakh. This will increase the investible income for this income class, creating opportunities for Insurers to pitch their products to them.