Making Ayushman Bharat more comprehensive yet fool proof, convincing more people to buy health and life cover, boosting macro economic fundamentals in the wake of recessionary trends to arrest a possible dip in premium collections are issues to be addressed by the upcoming Budget.

The insurance sector has been on the radar of government in recent years, with schemes like Ayushman Bharat, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Fasal Bima Yojana. There has also been traction on the regulatory front. The Insurance Regulatory and Development Authority of India (IRDAI) is in the driving seat, to expand reach in the last one year.

The first-of-its-kind Arogya Sanjeevani Policy made it mandatory for general and standalone health insurers to offer a standard individual health insurance policy from April 1, 2020 (they can also launch earlier but definitely from the next financial year).

According to IRDAI Chairman Subhash Khuntiya, it will be particularly useful to the middle-class and senior citizens. It could be a potential game changer for health insurance, with a minimum sum assured of ₹1 lakh and upper limit of ₹5 lakh per term of one year and making buying health cover easy.

Another boost is the regulatory sandbox approach, which permitted many innovative, tech-driven products in health insurance and motor cover, besides some application platforms. These are to be piloted from April 1, 2020.

However, a regulatory push has its own limitations. It is for the government to provide an enabling framework for these innovations to succeed and ensure their last-mile connectivity.

The Budget can play a key role by further incentivising buying of health and life insurance.

With key sectors in manufacturing, such as automobile, facing challenges due to de-growth or tardy growth, there is a risk of fall in premium collections, going forward, already witnessed in corporate and income tax collections. So, a general medicine to galvanise economic growth by spending can indirectly work for insurance sector too.

There has been a demand and expectation among insurers for increase in upper limit of Foreign Direct Investment beyond the current cap of 49 per cent. It is learnt that the regulator sought opinions from the stakeholders on the matter last month. In her Budget speech in July 2019, Finance Minister Nirmala Sitharaman made a reference to a possible hike in FDI limit in insurance. Given the indications, it is likely the Budget will move in this direction.

While there are a few positives, the numbers underline the challenge ahead. Insurance still needs to travel further to give the aam aadmi greater social security, with life and health cover.

There is scope for expansion: life insurance penetration went up from 2.15 per cent in 2001 to 4.60 per cent in 2009. Since then, it exhibited a declining trend till 2014. There was significant increase in 2015, reaching 2.72 per cent and it remained the same the next year. It increased to 2.76 in 2017 but dropped to 2.74 per cent in 2018, as per data available with IRDAI.

Health insurance penetration in the country is still low due to lack of awareness and complexity of the existing products. Clear policy wordings will benefit existing customers and also bring in new ones, boosting reach.

The penetration of non-life is up from 0.56 per cent in 2001 to 0.97 now. So, there is still room for initiatives in the Budget to take insurance to the next level, to benefit the common man.

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