Budget 2021

Nat-Cat events: ‘Budget should introduce affordable home insurance scheme’

KR Srivats New Delhi. January 24 | Updated on January 25, 2020

To cover property losses, an index-based system could be adopted, says Tapan Singhel, MD & CEO, Bajaj Allianz

The upcoming Budget should introduce an affordable home insurance scheme to cover losses to property during Nat-Cat events, Tapan Singhel, Managing Director & CEO, Bajaj Allianz General Insurance, has suggested.

This could be offered in association with insurance companies, Singhel said when asked about his budget expectations.

An index-based scheme (parametric insurance) can be adopted which compensates for the damage caused due to catastrophic event, as per the pre-defined trigger for such events, he said.

The premium for the same can be collected along with the property tax and once the claim is triggered, amount can directly be transferred to the beneficiary’s Jan Dhan account linked to the home insurance policy, he suggested.

“It will go a long way in bridging the protection gap between the economic losses and insured losses during the Nat-Cat events,” Singhel said.

He also felt that a tax exemption for home insurance just like health insurance deduction under Section 80D will encourage people to opt for home insurance.

Singhel also highlighted that in the recent times during Nat-Cat events, one has witnessed several homes/shops of people getting washed away in floods. “Most of these property losses belong to the lower strata of people,” he said.

GST rates

Singhel also underscored the need for government to look at reduction in GST rates across insurance products.

This is necessary to encourage people to purchase the important financial tool of insurance. The current rate of 18 per cent is applicable for majority of insurance products, he said, adding that this rate could be a dampener for people to opt for insurance.

Singhel expressed hope that the upcoming Budget would increase the limit of bank deposit insurance to level which appropriately safeguards the account holders.

“Currently, the sum insured is ₹1 lakh and it needs to move up,” he said.

Published on January 24, 2020

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