By Mr. Rakesh Goyal, Director, Probus
The insurance sector in India underwent substantial changes in 2024 as a result of comprehensive regulatory changes. These initiatives are laying the foundation for a cleaner, more transparent industry with affordable products that ultimately benefit the end policyholders.
Regulatory Changes: The lower surrender charges for endowment policyholders were one significant change. This ensures fairness and transparency in the market, protecting policyholders from financial penalties or burdens. The life insurance sector will be impacted by this reform in the near and distant future.
Government Changes: A significant development is the anticipated reduction in Goods and Services Tax (GST) on health and life insurance policies. This long awaited initiative, if concluded favourably in the GST council meeting tomorrow, will improve affordability and have long-term benefits for the industry.
Industry level changes: Another positive development is the progress in regulatory processes for issuing new licenses, which, though not yet finalized, signals growth and innovation in the sector. Additionally, the share of brokers in insurance distribution expanded significantly in 2024. These trends highlight the industry’s focus on fostering enhancing distribution networks, and catering to evolving customer needs.
Outlook for 2025: The reforms of 2024 have set the stage for significant growth. Although the past year’s growth in both life and non-life sectors was modest, the regulatory and government-driven cleanup efforts, alongside the industry’s focus on extending distribution, are expected to steer the industry in a new direction. Industry participants are aligning their policies and strategies to reflect these developments. This comprehensive reform marks a turning point for the long-term growth of the industry, creating a positive and lasting impact for policyholders and the sector alike.
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