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Lookback @ 2023: How Budget tax setback, IRDAI’s expenses and commission regulations affected the life insurance industry this year | Simply Save

The life insurance industry also saw a shift towards launch of guaranteed returns traditional policies due to higher government securities (G-sec) rates prevalent currently

December 13, 2023 / 06:14 PM IST

For the life insurance industry, year 2023 was an eventful year.

It started with a dampener, as Budget 2023 withdrew the tax-free status to maturity proceeds of traditional life policies purchased after April 1, 2023, where collective annual premiums exceeded Rs 5 lakh.

The Insurance Regulatory and Development Authority of India (IRDAI) introduced expenses of management (EoM) and payment of commissions rules, besides a host of other reforms, in 2023.

Also read: Exclusive: New commission rules will benefit policyholders & insurance firms: IRDAI chief

Work on Bima Sugam – a digital, industry-wide platform for selling, servicing policies and selling claims – which is billed as the UPI moment for insurance is also underway.

To look back at the key developments of year 2023 and look at what could be in store in 2024, Moneycontrol’s Preeti Kulkarni spoke to Vighnesh Shahane, Managing Director and CEO of Ageas Federal Life Insurance. Here are the key highlights from the interaction:

- Have heard some CEOs say Budget 2023 move (withdrawal of tax-free status to maturity proceeds of fresh traditional life insurance policies where collective premium exceeds Rs 5 lakh).

- I do not expect any cataclysmic changes in Budget 2023. We have been asking for a separate tax deduction bucket for life insurance policies and tax-free status to annuity income, but nothing’s come our way so far.

- No major announcement is likely to come through in the interim Budget 2024

- Do not foresee any hike in term insurance rates for now.

- Given the pace of reforms that IRDAI has introduced, its vision of ‘Insurance for All by 2047’ could be achieved sooner

- The state lead insurer plan (where one insurer takes the lead in pushing insurance in one state) is in place; Bima Sugam, a one-stop shop for insurance products, Bima Vistaar, which is a composite product and Bima Vahak (women-led distribution model) will give a further push to deepening penetration.

- The regulator’s EoM rules have made the industry more cost conscious, which is a good sign.

Also read: MC Exclusive: Common hospital network, health claims exchange and deeper penetration can minimise claim hassles, says IRDAI chief

- Ageas Federal has not had to rejig product portfolio, we have been launching products across Ulip, participating, non-participating, term insurance and pension categories. It is a balanced portfolio – non-par products constitute 70-75 percent of the portfolio, Ulips 20 percent and participating products account for 10-12 percent.

- Non-participating, guaranteed return policies with long-term payout options have done well, with many insurers, including us, introducing this product to lock into high G-sec rates.

Preeti Kulkarni
Preeti Kulkarni is a financial journalist with over 13 years of experience. Based in Mumbai, she covers the personal finance beat for Moneycontrol. She focusses primarily on insurance, banking, taxation and financial planning
first published: Dec 13, 2023 06:09 pm

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