FM asks for proposals to boost general insurance biz

Finance Minister P Chidambaram today asked general insurance companies to come up with specific proposals so that the government could take measures to increase penetration of non-life insurance business which is at present estimated at less than one percent of GDP.

“We will get back to the Ministry within the week with specific proposals for boosting general insurance,” said the head of a public sector insurance company after the meeting of industry representatives with the Finance Minister.

To increase penetration of general insurance, Chidambaram has asked CEOs of public and private sector companies to provide suggestions for removing impediments that hamper growth of the sector, said an official release.

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The industry representatives during the meeting raised various issues with regards to taxation, loss-making motor insurance business and health insurance, the public sector insurance company official said.

He added the Minister wants them to come up with specific proposals. Among other things, the industry representatives pitched for de-tariffing of motor insurance, development of pricing mechanism for health insurance business and lowering of the Minimum Alternate Tax (MAT) on the sector.

“Our (general insurance) penetration rate is low. It is 0.7 percent. How do we improve it to average standard which is 1.5 to 4 percent? The road map is to be prepared by all of us,” Financial Services Secretary D K Mittal told reporters after the meeting.

The basic agenda of today’s meeting was to work out ways to increase penetration of non-life insurance and promote financial inclusion, Mittal added.

PTI