In recent years, general insurance companies have faced profit challenges due to significant natural calamities impacting regions like Tamil Nadu, Jammu & Kashmir, and Cyclone Hud-Hud. To bolster awareness around householder and shopkeepers’ insurance, the general insurance industry is urging the government to consider tax exemptions for premiums associated with these policies.
Current Tax Exemptions and Industry Proposal
Presently, only premiums for life insurance and health insurance enjoy exemptions under Sections 80C and 80D of the Income Tax Act. The industry contends that extending tax exemptions to householder and shopkeepers’ insurance premiums would be advantageous for all stakeholders. Insurance companies typically allocate 12-15% of premiums to home and shopkeepers’ policies, but low premiums result in limited earnings for agents.
Industry Impact and Claims Scenario
Over the last three years, general insurers have faced claims surpassing Rs 10,000-12,000 crore due to various catastrophic events. Following recent floods in Tamil Nadu, claims have already reached Rs 3,000-3,500 crore. The industry is looking to increase awareness and renewals for home and shopkeeper insurance products.
Industry Voices and Recommendations
KG Krishnamoorthy Rao, MD and CEO of Future Generali India Insurance, emphasizes the importance of home insurance, particularly as a crucial financial asset. He recommends granting tax exemptions on home insurance premiums in the upcoming budget. Sasikumar Adidamu, Chief Technical Officer at Bajaj Allianz General Insurance, supports the idea of tax incentives to boost overall insurance penetration, considering the low coverage during major catastrophic events.
