Union Finance Minister Nirmala Sitharaman chairs the ninth Pre-Budget Consultation with the experts from the Infrastructure, Energy and Urban Sectors in connection with the forthcoming Union Budget 2025-26, in New Delhi
| Photo Credit: ANI

Insurers are seeking tax benefits for buyers and incentives for selling policies in their wishlist for the upcoming Union Budget as the country is projected to emerge as the G20’s fastest-growing insurance market.

In 2023-24, the country’s insurance penetration was at 3.7% compared to 4% in 2022-23, according to the Insurance Regulatory and Development Authority of India (Irdai).

The insurance penetration for the life insurance industry marginally declined to 2.8% during 2023-24 from 3% in the preceding year. The penetration with respect to the non-life insurance industry remained the same at 1% during 2023-24 as in 2022-23.

India is expected to lead G20 with an average 7.3% premium growth over 2025-29 and become the fastest-growing insurance market among the elite grouping, a Swiss Re report released on Tuesday (January 14, 2025) said.

On expectations from the Budget, Neha Parikh, Vice President and Sector Head – Financial Sector Ratings at ICRA Ltd, said that given the weak solvency position of the PSU general insurance companies, the announcement related to budgetary allocation for their recapitalisation will be positive.

“Further, given the low penetration of the insurance segment, the government can announce measures to incentivise the penetration, especially for the lower ticket size policies,” Ms. Parikh said.

Mayank Gupta, Co-founder and COO at Zopper, was of the opinion that addressing the ailing insurance penetration problem by incentivising the industry participants to bring new-to-insurance customers into their fold could be one such strategy to expedite the coverage of larger populations under insurance.

“Allowing insurance companies greater flexibility in creating and distributing insurance plans by using technology and moving beyond traditional methods is also the need of the hour,” he said.

Mr. Gupta suggested that cross-selling insurance along with other financial products should be encouraged as this reduces the distribution cost of insurers while at the same time easing the accessibility and affordability of such products for the end customer.

Balachander Sekhar, co-founder & CEO of RenewBuy, said the Union Budget provides excellent opportunities to pump up the insurance sector, which is hoping for a reduction in GST rates to make health insurance more affordable, an increase of tax exemption to encourage people to buy insurance policies that would ultimately provide security and long term capital, and rationalisation of capital gain taxation.

“In addition, providing incentives for insurance in rural India will significantly impact expanding and promoting insurance in those areas where penetration is very low,” Mr. Sekhar added.

On Budget expectations, Anup Rau, Managing Director and Chief Executive Officer of Future Generali India Insurance Company, said India’s insurance sector is poised for its most significant reforms to date.

The IRDAI has set an ambitious vision of “Insurance for All by 2047”, prompting stakeholders to explore innovative yet prudent ways to expand affordable coverage.

“Affordability will drive accessibility thereby enhancing reach and penetration of insurance across the country,” he said.

On the health insurance side, Rau said there is a need to enhance the deduction limit under Section 80D, which has remained unchanged for nearly a decade now despite a significant surge in healthcare costs.

Avinash G Singh, Head – Investment Research & Analytics at Aranca, said the insurance industry is looking forward to the Union Budget 2025 with hopes for reforms that could drive growth and accessibility.

Key expectations include a dedicated tax deduction for life insurance premiums under Section 80C, a revision of income tax slabs and exemption limits to enhance disposable incomes, and measures to encourage higher investments in insurance products, Mr. Singh said.

Meanwhile, Swiss Re in a report on the insurance market outlook for India said India’s insurance market is projected to be the G20’s fastest-growing market over the next five years, with total premium volumes (life and non-life) up 7.3% in real terms on average each year.

Growth underpinned by macroeconomic tailwinds, digitalisation progress and the conducive regulatory environment, it said.

The report said life premiums are estimated to grow by 4.8 per cent in 2024 in real terms and by 5 per cent in 2025 (2025-29: 6.9 per cent), following a meagre 0.7 per cent growth in 2023, when the savings segment was adversely impacted by regulatory and taxation changes.

“The non-life insurance business is forecast to expand to 7.3 per cent (up from 5.7 per cent in 2024) on the back of rising risk awareness, robust economic growth and regulatory initiatives in support of digitalisation,” it added.

There were 26 life insurers, 25 general insurers, eight standalone health insurers, 12 reinsurers and foreign reinsurance branches, and two specialised insurers, registered as of March 31, 2024.

Union Finance Minister Nirmala Sitharaman with team members shows the Budget paper before leaving for Rashtrapati Bhavan, at North Block in New Delhi on July 23, 2024.
| Photo Credit: SHIV KUMAR PUSHPAKAR

The Union Cabinet, headed by Prime Minister Narendra Modi, approved the full Budget for 2024-25, sources said. Following this, Finance Minister Nirmala Sitharaman will present her seventh budget in the Lok Sabha.

Follow the LIVE Budget updates here

Ms. Sitharaman, India’s first full-time woman Finance Minister, has presented five full budgets since July 2019 and an interim budget on February 1, 2024.

This is the first budget of the BJP-led NDA government in its third term in office.

Earlier today, Ms. Sitharaman called on President Droupadi Murmu before presenting the full Budget for 2024-25. As per established tradition, the Finance Minister met the President at the Rashtrapati Bhavan before heading to Parliament.

President Murmu offered ‘dahi-chini’ (curd-sugar), considered auspicious, to Ms. Sitharaman before she left for Parliament to present the Union Budget.

It was encouraging that the Finance Minister today opened the Union Budget speech by talking about India’s economic growth, which is expected to be at 7%, the highest among the major economies. It was reassuring as across the world, there are several nations standing at the brink of a slowdown.

India’s success in managing the COVID-19 pandemic, even as it put people first, and yet managed to minimise the economic impact, stands as a valuable lesson for generations to come; that populations are the bedrock of an economy. Further, the crisis underlined that a nation must ensure its healthcare ecosystem is not only robust, but resilient too.

In the present day, delivering healthcare and making ecosystems resilient require a fine balance between advanced medicine, cutting-edge technology, skilled resources and preventive healthcare. A country’s health infrastructure must enable its doctors to deliver best-in-class clinical outcomes. There must be continuous innovation to boost quality of medical education and a concerted focus on skilling for healthcare is vital. Finally, contemporary technologies should be harnessed to achieve these goals, bridge gaps and prepare for the future.

I believe the Budget announcements set the course towards most of these aspects that will have an impact in the near and longer-term too. In particular, a welcome one was the 157 new nursing colleges that would be established in collaboration with existing medical colleges.

Similarly, skilling youth for the manifold aspects of healthcare will create a valuable talent factory for India and the world. Several nations with a considerable silver population are grappling with an acute paucity of resources and exporting our talent. New multidisciplinary courses for medical devices, setting up of 5G labs and centres of excellence for Artificial Intelligence will ensure that India has the talent base to exploit the opportunities from futuristic medical technologies, as they arise.

Focus on medical research and innovation with select ICMR labs made available to the private sector for research and development (R&D) will encourage collaboration between biotech entrepreneurs and the government. These initiatives along with a new programme to promote research and innovation in the pharmaceutical industry highlights the Budget’s focus on technology in making strong strides towards a healthier and more prosperous India.

Above all, the fact of medicine is that the best way to beat disease, is to avert it. Therefore, similar to the thrust on the Sickle Cell Anaemia Elimination Mission announced today, it would be wonderful if many more of the non-communicable diseases are targeted to prevent millions of untimely fatalities.

The writer is Executive Vice Chairperson, Apollo Hospitals and past president, NATHEALTH