Trade union decries move to weaken insurance firms

The IRDAI is planning to crowd the market by announcing that it is likely to issue licences to nearly 20 more companies both in life and non-life business. The insurance industry has for years, been demanding, for raising limits and introducing a separate tax incentive under 80 (C) to make insurance products attractive

Visakhapatnam: All India Insurance Employees’ Association (AIIEA) has deplored the NDA Government’s attempts to table a bill in the monsoon session of Parliament to further amend the insurance laws to change the minimum capital requirement, commission structure and allow issue of composite licences.

The IRDAI is also planning to crowd the market by announcing that it is likely to issue licences to nearly 20 more companies both in life and non-life business, Srikanth Mishra, general secretary of AIIEA, alleged here on Wednesday.

He said the government and the IRDAI (Insurance Regulatory and Development Authority) have been arguing that there is a need for greater insurance penetration and every Indian should have an insurance policy by 2047. “But it has to be realised that insurance penetration cannot be increased by merely crowding the market with a large number of players. Insurance penetration essentially depends on the level of disposable income, which is unfortunately rather low in India.”

Besides, some of the actions of the government and the regulator are bound to belie their expectations. The government has in the recent budget made it clear that it intends to migrate to an exemption-free tax regime. The new tax regime proposed by Finance Minister Nirmala Sitharaman offers no incentives for savings. The insurance industry has for years, been demanding, for raising limits and introducing a separate tax incentive under 80 (C) to make insurance products attractive, Mishra said.

The industry was also demanding withdrawal of GST on life and health insurance premiums. The imposition of GST on life and health premium is not only unjust but also unethical, seen in the context that the Indian constitution makes the right to dignified life and health a fundamental right. Rather than giving any concession to promote the industry, the government has imposed fresh taxes on high premium policies. Surely, this will have a long term impact on the industry, he opined.

Mishra said the AIIEA, which represents around 85 per cent of employees in the LIC and public sector general insurance companies, is strongly opposing the attempts to weaken the insurance sector. The AIIEA said it is happy to note that the LIC has closed its books for the year 2022-23 with yet another remarkable performance.

According to the AIIEA leader, the information available so far suggests that LIC collected a record first year premium income of Rs 2.31 lakh crore recording a growth of 16.75 per cent. It garnered Rs 58,632.08 crore through individual business and a record Rs 17,3261 crore through group business. It sold 2.40 crore policies.

He said the public sector general insurance companies have also done remarkably well recording a growth of 10.33 per cent. This significant performance has come in the background of a very tight macro-economic environment and budgetary proposals completely antithetical to the interest of the industry. Mishra informed that the LIC is the premier public sector financial institution in the country. LIC has Rs 44 lakh crore of assets under management.