Budget Expectations 2024: Given the upcoming elections, budget 2024 will be an interim one with limited policy announcements. However, there are a few expectations that still represent the general aspirations of the Indian insurance industry.
Several of these expectations relate to the government’s “Insurance for All” vision, aiming to achieve universal insurance coverage by 2047.
The insurance industry is crucial to India’s economic growth and financial stability, so the government is likely to focus on measures that boost its development and accessibility.
With the interim budget 2024 coming up on February 1, here are some key expectations from the insurance sector:
Digital Health Records
Rupinderjit Singh, VP, retail health, ACKO, highlights that in 2023, the health industry saw sweeping developments driven by regulatory measures, such as the introduction of Bima Sugam, the National Health Claims Exchange (NHCX), and the insurance amendment bill.
“The year 2024 will witness further exciting developments in the industry owing to a growing demand for seamless digital experiences, personalised offerings, and increased accessibility. With the harmonious synergies between the National Health Association, IRDAI, and NHCX, the sector is poised to thrive and promises to amplify these transformations, offering customers unparalleled developments,” Singh said.
In the upcoming budget, Singh anticipates that the government will take steps toward India’s Digital health mission by promoting ABHA ID which will enable digital health records and create a seamless health insurance claims experience.
Ankit Agrawal, co-founder & CEO, InsuranceDekho, said, “We anticipate that the finance minister will exempt insurance policies from GST, which will bring down insurance premiums. This step will increase insurance affordability and help fulfil Prime Minister Modi’s dream of insurance for all Indians by 2047.”
Tax Exemption Under 80C
Agrawal says that the industry is also expecting the government to increase the tax exemption limit under 80C, which will encourage savings, promote insurance coverage, and stimulate economic growth.
“Various studies have shown that increased insurance penetration multiplies the economy by reducing overall financial distress and making long-term growth capital available to important nation-building industries,” Agrawal added.
Remove Tax From Annuity Returns
Tejas Jain, founder, BimaKavach, also urges a lower GST rate on insurance premiums.
Jain says that experts in the insurance industry are pushing for significant adjustments in taxation, regulation, and technology in the budget. They support lowering the deductibility limits to provide tax benefits on life insurance products, especially term plans. To improve affordability, another is to remove taxes from annuity returns to increase their appeal.
Jain also underlines a composite licence, a relaxation of the minimum capital requirements, and the promotion of microinsurance for low-income populations among the regulatory expectations.
Jain says support for InsurTech businesses and a cybersecurity emphasis are sought in the technology sphere to encourage innovation and guard against cyber dangers, ultimately encouraging ubiquitous, inventive, and affordable insurance.
Minimum Capital Requirements
Jain says to promote competition and simplify operations, minimum capital requirements for new insurers should be loosened.
The need for a more efficient industry is evident in the idea for a composite licence.
Jain also adds that to ensure data security and promote technological breakthroughs, a legal framework that supports InsurTech businesses and cybersecurity measures is necessary.
Overall, the insurance industry hopes that the forthcoming budget will provide more regulatory flexibility, easing some of the strict regulations that impede market expansion and innovation.
Keep in mind that these are just some of the key expectations, and the actual budget may differ. We’ll have to wait and see what the finance minister announces on budget day.