Budget 2026: Insurance sector looks to policy clarity, digital push to deepen coverage

The upcoming Union Budget 2026 presents a crucial opportunity for India to translate the legislative intent of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, into measurable outcomes on the ground. This assumes significance as insurance is no longer viewed as an optional financial product, but as a foundational pillar of economic resilience, social security and crisis preparedness. As a result, the insurance sector is closely tracking Budget signals for clarity, consistency and ease of execution.

Girija Subramanian, CMD, New India Assurance and Member of the Executive Committee, General Insurance Council, said recent reforms reflect the government’s intent to deepen insurance penetration across the country. “The legislative reforms and policy announcements over the past few years signal a strong commitment to expanding insurance coverage. The Budget can play a key role in outlining a clear roadmap for implementing these reforms, particularly by providing greater visibility on the transition towards 100% foreign direct investment (FDI) in the sector,” she said.

According to Subramanian, policy certainty, strong governance standards and solvency safeguards will be critical to unlocking long-term capital and accelerating progress towards universal insurance coverage. She added that closer alignment between Budget priorities, GST treatment and the provisions of the Sabka Bima Sabki Raksha Act would further strengthen the ecosystem.

Bima Sugam and digital infrastructure

India’s insurance industry is widely seen as being at an inflection point similar to the one experienced by payments and taxation following the rollout of digital public infrastructure. In this context, Bima Sugam is emerging as a potential game changer.

Subramanian said Budget 2026 could support the evolution of Bima Sugam into a central digital hub for the entire insurance ecosystem. “A critical step would be upgrading the Insurance Information Bureau into a Unified Public Insurance Registry (UPIR) hosted on Bima Sugam. This could bring together insurers, intermediaries, hospitals, garages and other service partners, enabling easier authentication, reducing fraud and helping policymakers identify protection gaps with greater precision,” she said.

MSME risk protection

Despite being the backbone of India’s economy, micro, small and medium enterprises (MSMEs) remain significantly underinsured, particularly against climate risks and business interruptions. Industry stakeholders believe Budget 2026 can address this vulnerability through targeted intervention.

“It would be beneficial if Budget 2026 introduces a National MSME Insurance Framework aimed at improving resilience and reducing risk exposure,” Subramanian said. Linking basic insurance coverage with Udyam registration could encourage wider adoption, while insurers could develop standardised and affordable products covering property damage and business interruptions.

She added that promoting parametric insurance—where payouts are triggered automatically—could ensure faster relief during disruptions. Reviewing coverage caps offered through banks and NBFCs could also strengthen overall protection.

Workplace health protection

Rising out-of-pocket healthcare expenditure continues to be a major source of financial stress for Indian households. There is growing support for an employer–employee health insurance framework that reflects the evolving nature of India’s workforce.

Subramanian said a phased approach based on employer size or turnover could ease adoption. “The Budget could also consider tax incentives for low-wage and ‘missing middle’ employees. Recognising health cover for contractual workers as an eligible CSR activity would further encourage adoption and align with the goal of ‘Insurance for All by 2047’,” she said.

Women-centric insurance coverage

Women in India continue to face disproportionate gaps in risk protection. In an increasingly uncertain economic environment, Budget 2026 offers an opportunity to strengthen insurance access for women through Jan Dhan-linked initiatives.

“The government and industry can work together to design customised insurance products for women, including members of self-help groups and rural enterprises,” Subramanian said. Enhancing Jan Suraksha schemes, offering greater product choice and encouraging activation of dormant Jan Dhan accounts could significantly improve insurance penetration among women.

By addressing these structural gaps, the insurance sector believes Budget 2026 can play a pivotal role in advancing financial inclusion and building a more resilient economy.