Preview on Budget by Mahesh Balasubramanian, CEO, Kotak General Insurance

This year’s budget assumes great significance as we need to arrest the slow down and get growth back in the economy. Many sectors are struggling with poor demand and low credit flow. From the General Insurance (GI) industry perspective, one hopes that there is enough impetus given to get Private sector Project investments as that would help grow the Commercial Lines; the Auto sector needs a revival package as slump in auto demand has affected insurance industry premium growth.

The Catastrophe incidents highlight the fact that less than 20% of all Losses are actually insured. With such low penetration, the cost of the losses is borne largely by the government and individuals. It is recommended that steps are taken to encourage individuals and small businesses to take insurance. 

There are currently certain anomalies in the GST for reinsurance contracts. While GST is not levied on the original insurance contract between the insurer and customer like Crop Insurance, the reinsurance contract between insurer and the reinsurer attracts GST - this needs to be relooked into.