Union Budget 2026: Insurance Sector Seeks Key Reforms for Growth and Inclusion
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Moneycontrol•27-01-2026, 16:30
Union Budget 2026: Insurance Sector Seeks Key Reforms for Growth and Inclusion
- •The Indian insurance sector has seen consistent growth, with investments quadrupling and total premium growing from Rs 7.6 lakh crore in FY20 to Rs 11.9 lakh crore in FY25, driven by regulatory liberalization and digital acceleration.
- •Key reforms by IRDAI include the "use and file" product regime, simplified licensing, 100% FDI liberalization, and inclusion-led initiatives like Bima Trinity, safeguarding policyholder interests.
- •Despite progress, India's insurance penetration remains modest at 3.7% of GDP, compared to a global average of 7.3%, highlighting a substantial protection gap.
- •The industry seeks a composite insurance licensing framework, rationalization of GST and tax benefits (e.g., exempting agent commissions, enhanced Section 80D deductions), and a risk-based capital framework in the upcoming Union Budget.
- •Policy recommendations include incentivizing climate and parametric insurance, lowering entry barriers for niche insurers, promoting data/tech/skill development, and enhancing health claims oversight and pricing transparency.
Why It Matters: The Indian insurance sector, despite growth, seeks crucial Union Budget 2026 reforms to boost penetration and inclusion.
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