The ongoing COVID-19 pandemic has resulted in heightened awareness about the effectiveness of insurance against health or life crisis. With the 2021 union budget fast approaching, the insurance industry is hoping that the government would provide further impetus to deepen the penetration of insurance in the country considering its role as the social security tool.
"Insurance is an important social security tool which is closely linked to our economy. Right from insuring the backbone of our economy i.e. the farmers through crop insurance to taking care of new-age risks like cyber threats through cyber insurance, insurance is there to safeguard most of the risks we face today," says Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance. " Hence, I believe it becomes even more crucial to provide a much-needed boost to the industry in the form of below measures to continue safeguarding both the economy and the society against unforeseen risks."
Singhel urges the government to reduce the GST (goods and services tax) rates on insurance premiums.
"On the direct tax front for individuals, I feel the government should provide tax exemption to the people opting for home insurance. Thus, providing them with much-needed motivation especially in the light of increasing natural calamities that leave people stranded. This may be done by providing a separate limit over and above the already savings biased 80C limit," added Singhel.
"On the indirect tax piece, there is a direct need for the government to reduce the GST rates on insurance premium given the low insurance penetration in India and the fact that insurance is intended to provide financial support against any sudden human or economic loss."
Aatur Thakkar, Director, Alliance Insurance Brokers, says the government also looks at increasing the FDI (foreign direct investment) in insurance should be further raised.
"Government should look at boosting the insurance sector through funds infusion. FDI limit should be raised from 49 per cent to 70 per cent which will help in strengthening insurance infrastructure," said Thakkar. "Indian insurance sector needs urgent fund infusion, given the pandemic impacting key ratios. Funds will also help in boosting sentiments of insurance intermediaries like insurance agents, web aggregators, insurance brokers."
Balachander Sekhar, CEO, and Co-Founder, Renewbuy.com says extending tax-saving benefits of insurance would help in keeping penetration.
"We believe that the need for Insurance coverage is critical in these times and should be a very important consideration in budget 2021. The government should look at strengthening the sector by building insurance accessibility for consumers. Tax saving impetus towards insurance under section 80C and 80D would help in increasing the insurance penetration in Tier II and III cities, where the insurance gap majorly lies and could give relief to consumers, especially in the wake of COVID-19." said Sekhar.
