The Union Finance Minister, Mr Pranab Mukherjee, on Tuesday said the Insurance Regulatory and Development Authority and the Planning Commission will develop a framework to give a further fillip to infrastructure financing by the insurance industry. “Insurance sector has contributed immensely for infrastructure development. It is desirable that insurers should support creation of infrastructure for the people,” he said while launching an IRDA Call Centre for Grievance Redress and Information Bureau here on Tuesday. The Government is also working with the IRDA to strengthen the insurance ombudsman system. “Registration of complaints suo motu and by reference by IRDA are being planned,” the Finance Minister said.
The IRDA Chairman, Mr J. Hari Narayan, requested the Finance Minister to provide better tax benefits for the insurance products in the proposed new Direct Taxes Code (DTC). The benefits should be ten times of the cover amount in view of the long-term nature of the products, he suggested. At present, the tax benefit is at five times the cover. The proposal in the DTC is to extend the benefit only if the annual premium reaches 20 times the cover. The pension products should also be given same treatment in view of the long-term nature investment, he said. In general insurance, Mr Hari Narayan said the motor third party damages on road should be made limited. During the last decade of IRDA’s existence, insurance penetration had gone up from 1.8 per cent to 4 four per cent while the per capita insurance density had improved from Rs 350 to Rs 2,000.
Caution on complexity
Mr Mukherjee also cautioned the industry on the complexity of products and high operation costs. “The global financial crisis was due to these factors. There is a need for lean organisation and cost-cuts by leveraging IT,” he said. –