Non-life insurance segment has a very high potential to grow. However, in the absence of incentives, individual prefer saving instruments. Therefore, there needs to be a concerted effort to make insurance all the more affordable and attractive for the common man, says Ajay Bimbhet, Managing Director, Royal Sundaram Alliance Insurance Company Ltd, in his pre-Budget expectations.
Mr Bimbhet lists a few recommendations on service tax, income tax and some other things related to general insurance products for the Union Budget 2013:
Measures to increase insurance penetration:
- Considering the abysmally low penetration of insurance in our country, there needs to be a concerted effort to make insurance all the more affordable and attractive for the common man. The government should consider waiving off service tax on insurance premium paid, or at least exempt health insurance products, RSBY, crop insurances, Senior Citizens Policy and long-term insurance products such as property and other exempt categories from the purview of service tax.
- To promote insurance penetration, the government can consider giving SOPs to certain sectors like SME’s for providing health insurance cover to all employees.
- The government must consider incentivising people with increasing the limit of Section 80C from the current limit of Rs 1 lakh to Rs 2 lakh at least.
- Further, given the high cost of medical care and to encourage more people to purchase health insurance, the limits under Section 80 D of Income Tax Act, 1961 should be raised to Rs 50,000 from the current level of Rs 15,000.
(Currently, under this section, health insurance premium paid in accordance with a scheme framed by any insurer approved by the Insurance Regulatory & Development Authority ( IRDA) can be deducted up to Rs.15,000 from taxable income. If the policy is taken on the health of a senior citizen, the limit gets enhanced to Rs 20,000)