The Budget for 2009-10 did not go down well with the insurance industry, which expected tax concessions on several schemes and a roadmap for raising the foreign direct investment cap to 49%.
“From the life insurance industry perspective, we were expecting the finance minister to give a road map for the Insurance Bill. In that regard, the Budget was a disappointment,” said MetLife India Insurance managing director Rajesh Relan.
Further, no investment incentives were extended to life insurance. The life insurance industry will continue to grapple with the other asset classes under the current exemption limit of Rs 1 lakh for savings products, he said.
Relan also said the Budget did not provide any clarity on the service tax levied on insurance products. This will continue to impact the policy holder’s premium.
While, the FM is targeting a growth rate of 9% in FY10, there are no structural benefits provided to boost the economy to reach that level, he said, adding, given the confidence of achieving the target, it may only help augment the current positive sentiment about India in the short term.
Kamesh Goyal, country manager, Allianz and managing director, Bajaja Allianz Life Insurance said the insurance industry had a lot of expectations like exemptions and benefits for insurance premiums or a separate section in Section 80 C, so that it could have provided a boost for long-term investments like life insurance.
V Vaidyanathan, managing director and CEO, ICICI Prudential Life Insurance said the insurance industry is expected to open up. ?The Insurance Amendment Bill is already pending. There are no political or ideological issues. It would only be a matter of time, say a few months, or the next session of Parliament.?
?The FM has set a framework for a growth of 9%. This signals a big positive for the insurance industry as this allows significant opportunities for investments and protection. These are natural derivatives of growth,? he explained.
KS Gopalakrishnan, chief financial officer and appointed actuary, Aegon Religare Life Insurance said, ?We clearly expected directional policy statements on encouraging long-term savings and insurance via rationalisation of the tax regime. For example, progress on the front of ?exempt-exempt-tax? was expected. Further, rationalisation of service tax on unit linked insurance products is long overdue and we are disappointed at not seeing a mention of this in the budget.? Rakesh Jain, CFO and director ? corporate, ICICI Lombard General Insurance said that, ?The impetus provided by the Union Budget through the mass health programme will drive the penetration of general insurance in the country and bring it closer to international benchmarks.?
Vikram Kotak, CIO, Birla Sun Life Insurance said the equity market is disappointed because the finance minister did not touch generic announcements like the FDI hike in few sectors and no significant mention on divestments also made short-term participants more jittery.