'Home Insurance Should Be Made Compulsory'
With the budget 2016 just around the corner, we are looking forward to this year's union budget with a lot of expectation. With increased awareness and penetration level coupled with the GDP growth, the general insurance sector is poised for a growth of around 12 per cent in 2016.
I am confident that the budget this year will lay out a clear roadmap to set the right vision for Indian economy. Let me briefly share my thoughts on the focus areas for the general insurance sector.
Raise the income tax exemption bar in health insurance premium for self and family
The increase in the limit for income tax exemption in health insurance last year was a welcome move wherein we saw a considerable increase in the number of people/families opting for policies with up to Rs 10 lakh cover. However, there is an impending need for further tax exemption as the health insurance is still not adopted as a necessity for one's self and family. Further exemption will encourage people to get a health insurance policy with extended covers which is a necessity in today's time given the current medical inflation in the country.
Introduction of compulsory home insurance for a minimum basic sum assured and income tax exemption on premium paid for home insurance
The repercussions of natural calamities are always more than one can anticipate. However, one of the worst hit were homes that have been heavily inundated during Chennai floods or the destruction caused because of the earthquake in Nepal, causing irreparable damage to its contents resulting in extensive financial loss. While one protects family with life insurance and health insurance, people tend to overlook the need for home insurance. Apart from the building, the contents and other valuables in the house can also be protected through a home insurance cover.
We strongly believe making home insurance compulsory for a minimum basic sum insured will lessen the burden on individuals/families, especially for those staying in calamity prone areas. Any damage to this can cause financial as well as emotional setback which a right property insurance can protect you from.
Continuing the reforms agenda to bring more growth in the industrial sector
Significant initiatives are needed for realizing financial inclusion and delivering financial services to the poorest section of the society. While the FDI in insurance has been a great move, Insurance and Regulatory Development Authority of India (IRDAI), should come out with the finer aspects of the regulation.
Overall, the bar was already set high in last year's budget. In this budget, we expect the government to take strong steps that will be the driving force to create and sustain high growth.
(KG Krishnamoorthy Rao is MD and CEO of Future Generali India Insurance)
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