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IMPACT OF BUDGET 16ON INDIAN INSURANCE
SECTOR
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Insurance sector in India
In India we a!e "ot te #u"$ic and #ri!ate sector
or%ani&ations in Insurance sector' it as %onetrou% a nu("er
o) #ases*
1+1,• Te -i)e Insurance Co(#anies Act and
te Pro!ident Fund
1+.6• Nationa$isin% te -i)e Insurance sector'
-IC and GIC*
,///
• India a$$owed #ri!ate co(#anies in
insurance sector in ,///' settin% a $i(iton FDI to ,6
• FDI $i(it was increased to 2+,/12
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3ere do we stand in Insurance4
B5 ,/1, Indian Insurance is a US7, "i$$ionindustr5*
India8s $i)e insurance sector is te "i%%est inte wor$d*
A"out 96/ (i$$ion #o$icies wit Co(#oundAnnua$ Growt Rate :CAGR;
o) 1,!e 5ears*
?owe!er' on$5 two (i$$ion #eo#$e :/*,; areco!ered under
Medic$ai(*
In de!e$o#ed nations $i@e USA a"out 7.are co!ered*
“The Indian insurance market is a
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3at te sector e=#ected)ro( Bud%et 164
And wat te Bud%et 16as %i!en to te(4
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Expectations of
Insurance sector:1)rowth in !"I:
Te resu$t o) $i"era$isation o) )orei%n in!est(entcei$in%
)ro( ,6 #ercent to 2+ #ercent *
FDI8s $i@e AIA Grou# in Tata AIA -i)e Insurance Co -td'Sun -i)e
Financia$ Inc in Bir$a Sun -i)e Insurance Co -td
and Ni##on -i)e Insurance in Re$iance -i)e Insurancea$read5
raised teir sta@e )ro( ,6 to 2+*
More tan a do&en )orei%n co(#anies are e=#ected toraise
sta@es in teir !entures durin% tis 5ear*
Te5 are BNP Pari"as Cardi)' Insurance Austra$iaGrou#'
A!i!a P$c' Standard -i)e P$c' AIA' BE InsuranceGrou# and Fair)a=
Financia$ ?o$din%s o) Canada*
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#)Increase in $enetration:
G$o"a$ reinsurance %iant Swiss Re #oints out tatinsurance
#enetration in India in F1. was ust9*9 #ercent*
Si%ni>cant$5 $ower tan te %$o"a$ a!era%e o) 6*,
#ercent* Te #enetration is e=#ected to increase "ecause
o) te Pri(e Minister Narendra Modis insurancesce(es'
Te Pradan Mantri Sura@sa Bi(a oana
Te Pradan Mantri ee!an 5oti Bi(a oana*
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%)&ife Insurance needs separateexemptions:
Insurance sectors )ee$s $i)e insuranceneeds a se#arate
e=e(#tion' $i@e NPS o)
,/1.* Tere was a #o#u$ar de(and to increase
te ta= deduction $i(it o) Rs .//// to Rs, $a@ under section /C
o) te Inco(e
Ta= Act*
')To increase (edicaim insurancebase in India:
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Bud%et 16 I(#act on InsuranceSector1)o*ernment owned Insurance
companies to
be isted on the stock exchanges:
New India Assurance
United India Insurance
Orienta$ India Insurance
Nationa$ Insurance
are te )our #u"$ic sector %enera$ insuranceco(#anies*
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#)o*ernment is considering a proposa topermit '+ per cent !"I
throughautomatic appro*a route :
A (o!e wit te !iew to attract (ore o!erseasinHows*
Current$5' FDI u# to ,6 #er cent is #er(itted trou%auto(atic
a##ro!a$ route* For FDI u# to 2+ #er cent'te a##ro!a$ o) Forei%n
In!est(ent Pro(otion Boardis reuired*
%) ,ew heath protection scheme by theo*ernment:
Go!ern(ent to #ro!ide ea$t insurance o) u#to Rs 1 $a@ #er
)a(i$5*
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').Exemptions in ser*ice tax on the insurancepoicies:
Ser!ice ta= on ser!ice o) $i)e insurance "usiness#ro!ided "5 wa5
o) annuit5 under te Nationa$Pension S5ste( re%u$ated "5 PFRDA wi$$
"ee=e(#ted wit eJect )ro( 1st A#ri$ ,/16*
For eJecti!e i(#$e(entation o) tis sce(e a su(
o) Rs .'.// crore is #ro!ided "5 Finance Minister*
-)nnuity is the ony option to get
exemption from tax on E$!: Go!ern(ent as #ro#osa$ to ta= 6/ #er
cent o) te
EPF cor#us eJecti!e A#ri$
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Conc$usion
“The Indian insurance market is ahuge business
opportunitywaiting to be harnessed.”
nd run /aitey has widened thespace for !"I and !II0 and aso
hasconsidered to gi*e taxation
benets to it.
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Tan@ ouK
