Budget 2016: There has been a slew of announcements in the insurance sector, from allowing general insurance companies to list on stock exchanges to launching a new health protection scheme under which a cover up to R1 lakh per family will be provided.
The finance minister also announced that foreign investment will be allowed in insurance and pension sectors in the automatic route up to 49%. He also proposed to reduce the service tax on single-premium annuity (insurance) policies.
Insurance companies welcomed the move saying more money would flow into the sector after these announcements. G Srinivasan, chairman and managing director at The New India Assurance, said: “The announcements made in the Budget are positive for the Indian insurance sector. Both the statements on new health protection scheme and listing of general insurance companies are in the right direction.”
In his Budget speech, finance minister Arun Jaitley said foreign investment will be allowed in insurance and pension sectors in the automatic route up to 49% subject to the extant guidelines on Indian management and control to be verified by the regulators and public shareholding in government-owned companies, to ensure higher levels of transparency and accountability. To promote this objective, government-run general insurance companies will be listed on the stock exchanges.
The health protection scheme which will provide health cover of up to Rs1 lakh per family comes after a series of several catastrophic events in the last few years and the severe impact it had on the financial health of insurers. For senior citizens of 60 years and above under this category, an additional top-up package up to Rs 30,000 will be provided.
In order to increase more participation in single-premium annuity insurance policies, the government has proposed to reduce service tax from 3.5% to 1.4% of the premium paid in certain cases.