The union budget is possibly the single most powerful tool that drives trends in the Indian market. That’s why Finance Minister Nirmala Sitharaman grabbed the spotlight on July 23, when she unveiled the Union Budget 2024. This presented a forward-looking vision for “Viksit Bharat” and a roadmap to continue strengthening India’s prominence on the global stage.
The Union Budget 2024 emphasised capital expenditure, talent development, R&D, infrastructure development, and capital investment, which play a key role in India’s sustainable growth. The latest Union Budget was befitting for a country that has emerged as the 5th largest in the world and the fastest-growing major economy.
Policy continuity and financial stability are likely to form the springboard for businesses and individuals to reach new heights this year.
What’s in it for Insurance Companies in India?
The Union Budget 2024 brought some good news for the insured, thereby benefiting insurance companies. With the TDS (tax deduction at source) rate being slashed from 5% to 2%, people will now receive a higher amount of payout from their life insurance policies. This is the TDS under section 194DA of the Act, which life insurance companies in India are mandated to deduct before making payments to policyholders upon the maturity of policies.
The latest union budget could give a further fillip to India’s insurance sector, which is a bedrock of the country’s economic development. Backed by numerous transformations and technological advancements, the sector has staged a steep uptrend over the past few years to become the world’s fifth-largest life insurance market.
The TDS benefit of Union Budget 2024 is not limited to pureplay life insurance policies. Those who receive an income from Annuity plans will have much more cash in hand after the tax rate cut. This change in taxation by Union Budget 2024 could drive the demand for pension products.
The Union Budget 2024 marks another step towards the IRDAI’s (Insurance Regulatory and Development Authority India) mission of “Insurance for all by 2047,” laying the foundation for a more financially secured future for the country.
A Peek into the Economic Survey 2023-24
The Economic Survey 2023-24 highlighted the health insurance sector’s remarkable growth. Premiums in the sector grew fastest in the non-life insurance categories in fiscal 2023. Health insurance premiums constituted about 35% of the total premiums in FY23, with an estimated growth of 11%, as per the Economic Survey.
Increased awareness, supportive government policies, and innovative InsurTech solutions have spearheaded growth in the insurance sector. The survey also stated that India’s expanding middle class and higher discretionary spending will likely continue supporting the insurance sector’s phenomenal performance.
InsurTech in the Driver’s Seat
While presenting the Union Budget 2024, Finance Minister Nirmala Sitharaman emphasised the role of technology in economic growth and promoting social inclusion. By leveraging emerging technologies and being at the forefront of innovation, InsurTech is perfectly aligned with this objective. InsurTech solutions have democratised insurance by bringing greater awareness, transparency, ease of use, and accessibility for the insured. These factors have helped insurance companies in India reach a wider customer base and build greater trust with them.
Indians have exhibited a healthy appetite for tech adoption, making the country home to the world’s second-largest internet population and mobile penetration reaching close to 80%. Against this backdrop, InsurTech has enabled traditional insurance companies in India to stay relevant in a dynamic landscape that is interspersed with digital disruptions.
Also Read: How InsurTechs are revolutionising the claims process in the insurance sector.
