The health insurance sector has received a boost from the Union Budget. The tax deduction limit with respect to medical insurance premium under Section 80 D has now been increased from Rs 10,000 to Rs 15,000 and for senior citizens it has been enhanced from Rs 15,000 to Rs 20,000.
According to analysts, the size of the health insurance market is estimated to be around Rs 2,100 crore and the incentive will improve sales.
"The enhancement of the limit will boost health insurance especially plans such as critical illness, where the average premium size is higher than the normal hospital reimbursement scheme. We think the consumers would take this benefit and go for higher sum insured and coverage to take care of healthcare inflation," said S. Sreenivasan, CFO, Bajaj Allianz General Insurance.
"This will encourage more people to buy health insurance, safeguarding their future in times of need and also improve market penetration," added Antony Jacob, MD, Royal Sundaram Alliance Insurance.
Senior citizens can also look forward to more products with the Finance Minister asking public sector non-life insurance schemes to introduce tailor-made health insurance schemes. The National Insurance Company had launched an exclusive health cover for senior citizens in December 2006 and the other insurers are likely to launch similar covers.
Key amendments like the hike in Foreign Direct Investment to 49 percent will, however, only come with the passing of the comprehensive bill on insurance. Ajit Narain, MD and CEO, IFFCO Tokio General Insurance Co Ltd, said, "We look forward to the comprehensive bill to amend insurance laws which is to be introduced in the budget session."
"We are disappointed that the Government has not taken the opportunity to announce much-needed reforms required for the growth and development of the insurance sector. However, as announced by the Finance Minister, we look forward to a comprehensive Bill to amend insurance laws to be introduced in the budget session," said Bert Paterson, Managing Director, Aviva Life Insurance.