on February 16, 2014 by admin in Insurance Industry, Comments (0)

Vote on Account 2014: 8 expectations the insurance industry has from the …

With Lok Sabha election round the corner, instead of a full-fledged Union Budget, the finance minister would only be presenting a vote-on-account. Though one is not expecting drastic changes, Economictimes.com asked the top insurance industry men on what they expect from the government and a wish list for regulatory measures. Here are some of their expectations and concerns.

1. Stability in Regulations: During the past few years, the insurance industry has gone through a spate of significant regulatory changes and the regulator still has a lot of ground to cover. However, the industry is now looking for some stability; some time to settle down and get a hang of the new regime.

"Although most of the changes were driven by need for safeguarding the customer rights, they have had an impact on the industry. Since insurance is a long-term business, it has been a difficult time to make future plans as the industry is being hit with regular regulations," says Rajeev Kumar, chief and appointed actuary, Bharti AXA life insurance.

Also, these regulations were mostly product related which require disproportionate investment in development. "The regulations usually come with very less time to understand them and hence implementation of them becomes difficult. It would be helpful if the regulations do come with enough time for the industry to understand the implications and implement them in a correct manner," adds Kumar.

Another large scale change looming on the industry is the shift of banks from being corporate agents to brokers. "There is a need for further discussion on banks' readiness and whether it would serve the purpose of increasing reach of the insurance industry. Even if this is required for the customers' benefit, this regulation should be implemented in a phased manner to minimize disruption," says Rajesh Sud, CEO and Managing Director, Max Life Insurance

All players will be happy to see a long-term roadmap of the regulatory development of the industry. They believe, this will help the industry to plan effectively and take along all the stakeholders.

2. Tax Incentives: Tax incentives have been a key driver for the growth of disciplined savings behaviour, both in India and other markets.
Life insurance plays a critical role in utilisation of small savings for infrastructure development. To help the sector further enhance this role, the industry wants the government to provide additional tax savings support to the long-term savings instruments that clearly differentiate it from short-term financial instruments.

"The government needs to recognize the role life insurance can play in aggregating small savings for infrastructure development. An additional tax incentive of Rs.1.5 lakh to life insurance and Rs. 1 lakh for retirement plans could result in significant growth in life insurance industry which will also result in additional inflow of Rs. 90,000 crore in infrastructure and Rs. 2,20,000 crore into government securities by Financial Year 2020," says Rajesh Sud of Max Life Insurance.

Another wish is for a full tax benefits on health Insurance premium. "As health costs are increasing, rather than setting limits, the government should give full exemptions on health plan premiums. From the companies perspective, they can also boost growth for the sector by looking deeper into micro insurance and tax subsidies for companies who undertake micro insurance in a big way," Amarnath Ananthanarayanan, MD CEO, Bharti Axa General Insurance

3. Amendment in Motor Insurance: Third-party motor insurance has been bleeding for a long time now and insurers are looking forward to amendments in this space for a long time. Bhargav Dasgupta, MD and CEO, ICICI Lombard says that the motor insurance laws are not in sync with the changed scenario of today. "Among the important steps required are introduction of limits on amount of claim and permissible time to report a third party claim. In addition, there is a need for data repository and an effective mechanism for avoiding leakages and controlling frauds," he says.

4. Platform for Data Pooling and Sharing: The banking sector has credit information bureaus for data sharing and fraud control. The insurers believe it's high time that they too should have something on similar lines.

"The regulator could take steps to encouraging data sharing among insurers. This could help in developing more scientific ways of reaching premium," says Bhaskar Jyoti Sarma, MD CEO, SBI General Insurance. "Simplification of file and use guidelines can also prove to be very useful in expanding penetration. Simplified norms for pilots of new products can be a great help to the industry," adds Sarma.

Article source: http://economictimes.indiatimes.com/personal-finance/insurance/analysis/vote-on-account-2014-8-expectations-the-insurance-industry-has-from-the-government-and-the-regulator/articleshow/30509193.cms

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