Insurers eye tax advantages, incentives in Union Funds

Union Finance Minister Nirmala Sitharaman chairs the ninth Pre-Funds Session with the specialists from the Infrastructure, Power and City Sectors in reference to the forthcoming Union Funds 2025-26, in New Delhi
| Picture Credit score: ANI

Insurers are looking for tax advantages for patrons and incentives for promoting insurance policies of their wishlist for the upcoming Union Funds because the nation is projected to emerge because the G20’s fastest-growing insurance coverage market.

In 2023-24, the nation’s insurance coverage penetration was at 3.7% in comparison with 4% in 2022-23, in keeping with the Insurance coverage Regulatory and Improvement Authority of India (Irdai).

The insurance coverage penetration for the life insurance coverage trade marginally declined to 2.8% throughout 2023-24 from 3% within the previous 12 months. The penetration with respect to the non-life insurance coverage trade remained the identical at 1% throughout 2023-24 as in 2022-23.

India is predicted to guide G20 with a median 7.3% premium progress over 2025-29 and turn into the fastest-growing insurance coverage market among the many elite grouping, a Swiss Re report launched on Tuesday (January 14, 2025) mentioned.

On expectations from the Funds, Neha Parikh, Vice President and Sector Head – Monetary Sector Scores at ICRA Ltd, mentioned that given the weak solvency place of the PSU normal insurance coverage corporations, the announcement associated to budgetary allocation for his or her recapitalisation will probably be optimistic.

“Additional, given the low penetration of the insurance coverage section, the federal government can announce measures to incentivise the penetration, particularly for the decrease ticket measurement insurance policies,” Ms. Parikh mentioned.

Mayank Gupta, Co-founder and COO at Zopper, was of the opinion that addressing the ailing insurance coverage penetration downside by incentivising the trade members to convey new-to-insurance clients into their fold may very well be one such technique to expedite the protection of bigger populations beneath insurance coverage.

“Permitting insurance coverage corporations better flexibility in creating and distributing insurance policy by utilizing expertise and shifting past conventional strategies can also be the necessity of the hour,” he mentioned.

Mr. Gupta instructed that cross-selling insurance coverage together with different monetary merchandise must be inspired as this reduces the distribution value of insurers whereas on the similar time easing the accessibility and affordability of such merchandise for the top buyer.

Balachander Sekhar, co-founder & CEO of RenewBuy, mentioned the Union Funds gives glorious alternatives to pump up the insurance coverage sector, which is hoping for a discount in GST charges to make medical insurance extra reasonably priced, a rise of tax exemption to encourage individuals to purchase insurance coverage insurance policies that will finally present safety and long run capital, and rationalisation of capital achieve taxation.

“As well as, offering incentives for insurance coverage in rural India will considerably influence increasing and selling insurance coverage in these areas the place penetration may be very low,” Mr. Sekhar added.

On Funds expectations, Anup Rau, Managing Director and Chief Govt Officer of Future Generali India Insurance coverage Firm, mentioned India’s insurance coverage sector is poised for its most important reforms to this point.

The IRDAI has set an bold imaginative and prescient of “Insurance coverage for All by 2047”, prompting stakeholders to discover modern but prudent methods to develop reasonably priced protection.

“Affordability will drive accessibility thereby enhancing attain and penetration of insurance coverage throughout the nation,” he mentioned.

On the medical insurance aspect, Rau mentioned there’s a want to boost the deduction restrict beneath Part 80D, which has remained unchanged for practically a decade now regardless of a big surge in healthcare prices.

Avinash G Singh, Head – Funding Analysis & Analytics at Aranca, mentioned the insurance coverage trade is wanting ahead to the Union Funds 2025 with hopes for reforms that would drive progress and accessibility.

Key expectations embody a devoted tax deduction for all times insurance coverage premiums beneath Part 80C, a revision of earnings tax slabs and exemption limits to boost disposable incomes, and measures to encourage larger investments in insurance coverage merchandise, Mr. Singh mentioned.

In the meantime, Swiss Re in a report on the insurance coverage market outlook for India mentioned India’s insurance coverage market is projected to be the G20’s fastest-growing market over the following 5 years, with complete premium volumes (life and non-life) up 7.3% in actual phrases on common every year.

Development underpinned by macroeconomic tailwinds, digitalisation progress and the conducive regulatory surroundings, it mentioned.

The report mentioned life premiums are estimated to develop by 4.8 per cent in 2024 in actual phrases and by 5 per cent in 2025 (2025-29: 6.9 per cent), following a meagre 0.7 per cent progress in 2023, when the financial savings section was adversely impacted by regulatory and taxation modifications.

“The non-life insurance coverage enterprise is forecast to develop to 7.3 per cent (up from 5.7 per cent in 2024) on the again of rising danger consciousness, sturdy financial progress and regulatory initiatives in assist of digitalisation,” it added.

There have been 26 life insurers, 25 normal insurers, eight standalone well being insurers, 12 reinsurers and international reinsurance branches, and two specialised insurers, registered as of March 31, 2024.