Insurance industry seeks key reforms in budget to drive growth and accessibility

Vibha Padalkar, Chief Executive of HDFC Life, hopes the budget will address tax relief for pensioners purchasing annuity products.
Health Insurance representative image.
Health Insurance representative image.
Updated on
2 min read

MUMBAI: The insurance industry is anticipating a range of policy measures in the upcoming budget that will help move closer to the goal of achieving insurance for all by the time India reaches a century of independence. Leading the wish list is the cessation of double taxation on pensioners, a reduction or elimination of GST on insurance, particularly for health products, and finalisation of the long-awaited insurance amendments bill, which could introduce a composite licensing regime for the sector.

Vibha Padalkar, Chief Executive of HDFC Life, hopes the budget will address tax relief for pensioners purchasing annuity products.

“Currently, a pensioner is taxed at both ends first when withdrawing the pension and then again when withdrawing an annuity product purchased with pension funds. This double taxation needs to be rectified, and both the industry and the public are expecting relief on this front,” she told TNIE.

Padalkar also looks for a resolution of the insurance amendments bill, which has been delayed for years. If approved, the amendments could introduce a new licensing regime, allowing life insurers to also offer health insurance or hold a single licence for both life and general insurance.

Neha Parikh, Head of Financial Sector Ratings at ICRA Ratings, believes that a budgetary allocation for recapitalising state-run general insurers, given their weak solvency ratios, would be positive. She also suggested that the government could introduce measures to boost insurance penetration, especially for low-ticket size policies.

Naveen Chandra Jha, Chief Executive at SBI General Insurance, emphasized the need for incentives to expand the reach of health insurance, which has become crucial in protecting families from unforeseen medical expenses.

“As we move towards universal healthcare, the forthcoming budget presents a crucial opportunity to strengthen the health insurance sector. We expect policy measures that will enhance accessibility, simplify tax benefits, and encourage innovation,” Jha said, adding that such an environment would empower insurers to contribute to a healthier, more secure India.

Srikanth Kandikonda of Manipal Cigna Health Insurance highlighted the sector's rapid growth—25% per annum for the last three years—and stressed the importance of policy reforms to make healthcare more accessible. With rising healthcare costs expected to double in the next six years, and 40% of medical bills still paid out of pocket as of FY22, he warned that the goal of universal health coverage by 2047 will not be achieved unless the budget increases healthcare spending to 2.5% of GDP.

“Moreover, with rising healthcare costs and the need for higher sum-insured coverage, the government must reduce the tax burden by raising the limits under Section 80D of the Income Tax Act to Rs 50,000 for all individuals and Rs 1 lakh for senior citizens. This is crucial for achieving the vision of insurance for all by 2047 and will significantly reduce the financial burden on families investing in their health and financial well-being,” Kandikonda said.

Balachander Sekhar, co-founder of Renewbuy, an insurance broking firm, echoed the call for urgent policy intervention to drive new growth in the sector. He suggested that reducing GST on health insurance would make it more affordable, increasing tax exemptions to encourage insurance purchases, and rationalising capital gains tax as potential solutions.

Related Stories

No stories found.

X
The New Indian Express
www.newindianexpress.com