Key Highlights of Economic Survey 2023-2024 and Challenges in the Insurance Sector

The Economic Survey 2023-2024 was recently presented by Union Finance Minister Nirmala Sitharaman in the Lok Sabha, shedding light on key aspects of India’s economic landscape. At the same time, the Annual Report of IRDAI for FY23-24 highlighted significant challenges in the insurance sector, with over two lakh complaints lodged via the centralised grievance portal. A notable portion of these complaints targeted life insurers for unfair business practices, excluding the Life insurance Corporation of India.

The report emphasized the prevalence of product misselling in the insurance industry, stating that it is too rampant to be dismissed as an aberration of a few overenthusiastic sales personnel. Prompt and reasonable settlement of insurance claims, along with a lower rejection rate, are deemed necessary to increase insurance penetration. The document also stressed the importance of acknowledging misselling and misrepresentation, as well as compensating for consequential losses, as good business practices across various financial sectors.

With the upcoming budget presentation, Finance Minister Nirmala Sitharaman is set to surpass the record set by former Prime Minister Morarji Desai, presenting her seventh budget speech. The insurance industry has high expectations for Budget 2024, with Rakesh Jain, CEO of Reliance General Insurance, commending IRDAI’s initiatives to prioritize policyholders’ wellbeing. Jain highlighted the need for protection against unforeseen disruptions, especially in the face of increasing climate change and economic development-related risks.

In anticipation of Budget 2024, Jain recommended several measures to promote sustainable development goals and enhance risk management and protection in the insurance sector. These measures include increasing the upper limit for tax exemption on health insurance premiums, providing financial support or tax benefits for extensive insurance on electric vehicles, offering tax advantages for cyber insurance, and mandating health insurance for all employers to bring holistic protection to the working class.

Implementing these measures, according to Jain, will not only create a more resilient and sustainable economic environment but also pave the way for a healthier and greener future, fostering optimism and progress. As the government prepares to unveil Budget 2024, stakeholders in the insurance industry are hopeful that the proposed measures will address existing challenges and pave the way for a more robust and inclusive insurance sector.