What insurance industry is expecting from Union Budget 2020-21

New Delhi: Ahead of Union Budget presentation on February 1, almost every sector is expecting a lot and are sharing their wishlist with the government. The Insurance industry is reportedly expecting the government to increase the limit of foreign direct investment (FDI)up to 74 per cent in the upcoming budget.

Currently, the FDI in the insurance sector is allowed up to 49 per cent. Insurers also expect Finance Minister Nirmala Sitharaman to take cognisance of the complications faced by the insurance companies and announce reforms to boost capital inflow amid the credit crisis.

Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance said, "In the upcoming budget, we expect the government to focus on bringing more people under the ambit of Life Insurance, promote long-term savings and encourage capital formation. In a country with inadequate social security, protection offered by life insurance is inevitable; however, lack of its penetration is plaguing the industry."

"Introducing separate deduction of Rs 50,000 for first-time life insurance buyers and an additional capping of Rs 50,000 for someone purchasing a pure protection (term) plan will put life insurance on fast track. Another important move would be to encourage women to insure their lives and savings. Extra tax benefit for women policyholders will be a significant step," he added.

Rao further added that relaxation of section 10(10)(D), where the minimum sum assured is required to be 10 times of annual premium will also be a desirable move. "The budget should also bring about measures to bring parity between pension products offered by life insurers and NPS. Lowering rate of GST at 12% (with input tax credit benefit) will be beneficial for both policyholders and companies", he said.

Tarun Mathur, Co-founder & CBO, Policybazaar.com pointed out that only 8% of the population was covered by any form of insurance including term, health and the percentage of pure protection led insurance is abysmally low. "We do not have a social security system like the one prevailing in Europe where the government takes care of all the end-to-end requirements of the citizen post-retirement. In fact, the only available instrument of social security for citizens is insurance. Thus it is important for the government to adopt a sandbox approach towards insurance in Union Budget 2020 and incentivize people to make the nation socially secure." he said

It is worth mentioning that the Finance Minister had said in 2019 that the government would hold discussions with all stakeholders to relax FDI rules in the aviation, media, animation and insurance sectors. She also that the government would ease rules for single-brand retailers.

Source: Times Now News