The insurance sector seems to have mixed feelings for Budget 2013. While the opening up of the bank insurance route has been hailed as a key reform. The lack of additional tax concessions has disappointed insurers.
Finance Minister P Chidambaram gave his green signal to the bank insurance channel this Budget. That is, he allowed banks to act as brokers who can sell insurance products.
Now, this is a key reform the industry has been awaiting as it will help increase insurance penetration. The move has been welcomed by insurance players as a step in the right direction.
However, it is not all smooth sailing from here on, as a lot also depends on the final bank insurance guidelines that is yet to be released by the Insurance Regulatory and Development Authority (IRDA) and what they hold for the industry.
Commenting on the same, GV Nageswara Rao, MD & CEO, IDBI Federal Life Insurance said, they will need to have processes integrated with different companies, it is bit more complex. I would expect companies will choose this route with caution. I don’t expect all companies would be vying to become insurance brokers.
The other big budget announcement and a positive for the industry has been the assurance that bank know your customer (KYC) is enough to buy an insurance policy. So, if someone wants to buy an insurance policy, it will be a much easier task to verify customer details through a bank cheque or online transactions. This is being seen as a first step towards unified KYC for the financial sector
Nirakar Pradhan,Chief Investment Officer Future Generali Life Insurance says, this is convenient for the customer and operationally, it reduces a lot of operational burden.
But the lack of any additional tax concessions has disappointed the industry.
IDBI Federal Life Insurance said, Insurance industry was expecting tax benefits to promote sale of Insurance products because the industry has been seeing a decline in sale for 3 years in a row.
For now though all eyes now on what happens this Budget session and if indeed the government can get the much awaited Insurance Bill cleared by parliament.
