The All India Insurance Employees’ Association (AllEA) general secretary Shreekant Mishra on May 7 said that despite the sterling performance of the Life Insurance Corporation (LIC), attempts were being made by the Central Government and the regulator of the insurance industry, the Insurance Regulator Development Authority of India (IRDAI), to bring in certain policy changes which would adversely affect the interests of the LIC.
Vulnerable to fraud
Addressing a press conference here, Mr. Mishra said the government was likely to amend the insurance laws, and through the amendments, expected to change the minimum capital requirement, commission structure and allow issue of composite licenses.
“In simple words, the government is taking the insurance sector to the pre-1956-era, which would make this sector vulnerable to fraudulent practices, endangering the savings of the people. The IRDAI is also planning to crowd the market by announcing that it is likely to issue licenses to nearly twenty more companies both in life and non-life business,” he said.
“Surely, this will have a long term impact on the industry”Shreekant MishraGeneral secretary, All India Insurance Employees’ Association
“The government and the IRDAI have been arguing that there is a need for greater insurance penetration and every Indian should have an insurance policy by the year 2047. But, it has to be realised that insurance penetration cannot be increased by merely crowding the market with a large number of players,” he said.
“Insurance penetration essentially depends on the level of disposable income, which is unfortunately rather low in India. Besides, some of the actions of the government and the regulator are bound to belie their expectations,” he stated.
Exemption-free tax regime
Mr. Mishra added that the government had, in the recent Budget, made it clear that it intended to migrate to an exemption-free tax regime.
“The new proposed tax regime offers no incentives for savings. The insurance industry has for years, been demanding for raising limits and introducing a separate tax incentive under 80 (C) to make insurance products attractive,” he said.
“The industry was also demanding for the withdrawal of the GST on life and health insurance premium. The imposition of GST on life and health premium is not only unjust but also unethical seen in the context that the Indian constitution makes the right to dignified life and health a fundamental right,” he stated.
“Rather than giving any concession to promote the industry, the government has imposed fresh taxes on high premium policies. Surely, this will have a long term impact on the industry,” he added.