It is but quite natural for our expectations to be high from this year’s Union Budget given the progressive mindset of our current Government and the critical reforms introduced by them across sectors. This has clearly brought in the India growth story under global spotlight.
This year, the introduction of social security schemes by the Government has been a great move in deepening the penetration levels of insurance in India. These schemes have helped spread awareness about insurance especially in the rural landscape. With increased awareness and penetration level coupled with the GDP growth, the General Insurance sector is poised for a growth of around 12% in 2016.
I am confident that the Budget this year will lay out a clear roadmap to set the right vision for Indian economy. Let me briefly share my thoughts on the focus areas for the General Insurance sector.
Increase in the limit for Income Tax (IT) exemption in health insurance premium for self and family
Increase in the limit for income tax exemption in health insurance last year, was a welcome move wherein we saw a considerable increase in the number of people / families opting for policies with up to Rs. 10 lakh cover. However, there is an impending need for further tax exemption as health insurance is still not adopted as a necessity for one’s self and family. Further exemption will encourage people to get a health insurance policy with extended covers which is a necessity in today’s time given the current medical inflation in the country.
Introducing Income Tax (IT) exemption for premium paid for Home insurance and introduction of compulsory home insurance for a minimum basic sum insured
The data on the frequency of natural calamities hitting the country has revealed very high number of losses to property, assets and lives. While one protects family with life insurance and health insurance, people tend to overlook the need for home insurance. A natural calamity or any other misfortunate incident is not something one foresees. Since, a house is one’s biggest financial asset, introducing IT exemption on premium paid, we believe, will push more people to opt for home insurance.
In the wave of natural calamities over the past year, the worst hit was property / home. We strongly believe making home insurance compulsory for a minimum basic sum insured will lessen the burden on individuals / families, especially for those staying in calamity prone areas. This way, people need not run from pillar to post after their property / home has been damaged in such a situation.
Continuing the reforms agenda to bring more growth in the industrial sector
Significant initiatives are needed for realising financial inclusion and delivering financial services to the poorest section of the society. While the FDI in insurance has been a great move, Insurance and Regulatory Development Authority of India (IRDAI), should come out with the finer aspects of the regulation.
Overall, the bar was already set high in last year’s Budget. In this Budget, we expect the government to take strong steps that will be the driving force to create and sustain high growth.