By KG Krishnamoorthy Rao
As the countdown for Budget 2016 has begun, we are looking forward to this year’s Union Budget with a lot of expectation, given the progressive mindset of our current government and the critical reforms it has introduced across sectors. This has brought a huge success and growth across sectors boosting India’s economic growth and prosperity.
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 around12 percent 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.
Tax sop for home insurance
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. The data on the frequency of natural calamities hitting the country has revealed very high number of losses to property, assets and lives. In the wave of natural calamities over the past year, the worst hit was property/home.
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. 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.
Raise exemption on health insurance
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.
Increase in insurance penetration
Insurance penetration is currently very low in the country. This can be increased if the market is extended towards health insurance as well as home insurance. Health insurance market is under penetrated and hence, with increase in tax exemption we will be able to see an increase in the penetration rate. Also,if there is introduction of home insurance in tax exemption the insurance industry will definitely see a good rise in penetration of insurance in the country.
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, the 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 inlast year’s Budget. In this Budget, we expect the government to take strong steps that will act as a driving force to create and sustain high growth.
The author is MD and CEO, Future Generali India Insurance Company Limited. Views expressed are personal.