Budget 2026: Life and general insurers pitch reforms to deepen coverage, boost affordability

As the Union Budget 2026 approaches, industry leaders across life, health and general insurance are urging the government to introduce targeted fiscal and structural reforms to improve affordability, expand coverage and strengthen India’s insurance ecosystem, in line with the long-term vision of “Insurance for All by 2047”.

In the life insurance segment, experts say the Budget offers an opportunity to reinforce insurance as a core pillar of long-term savings and retirement planning. Tarun Chugh, Managing Director and Chief Executive Officer of Bajaj Life Insurance, said recent policy steps have laid a solid foundation for growth, but more needs to be done to close coverage gaps. “As the Union Budget approaches, it presents an opportunity to strengthen life insurance as a long-term savings and retirement solution through more consistent and equitable policy support,” he said, adding that penetration remains low, particularly in retirement planning and rural protection.

Chugh pointed to the need for aligning the tax treatment of annuities with other pension instruments. Taxing only the returns on annuity payouts and extending comparable deductions would allow individuals to choose retirement products based on suitability rather than tax arbitrage, he said. He also called for parity in taxation between traditional life policies and unit-linked insurance plans to simplify the framework and encourage disciplined, long-term wealth creation alongside protection. Improving affordability in rural and social insurance segments, including rationalising transaction costs such as stamp duty exemptions for low-ticket policies, could significantly deepen penetration, he added.

Echoing similar views, Alok Rungta, Managing Director and CEO of Generali Central Life Insurance, said existing limits on tax concessions for life insurance and retirement products need to be revisited to reflect rising incomes and evolving life-stage needs. He said simplifying taxation, encouraging pure protection plans and incentivising long-term savings could improve affordability and participation, while policy continuity would enable insurers to plan responsibly.

General insurance

In general insurance, health coverage remains a central focus. Rakesh Jain, CEO of IndusInd General Insurance, said the industry is at an inflection point following last year’s reforms, including the GST exemption on health insurance policies and stricter time-bound cashless claim norms. “Health insurance, now the core of the general insurance market, needs policy support to counter rising medical inflation and enhance access, especially for vulnerable groups,” he said.

Jain also highlighted the need for future-ready risk solutions as India’s mobility, infrastructure and asset base expand rapidly. He called for stronger domestic reinsurance capacity, clear catastrophe frameworks and stable regulation to support growing exposure to infrastructure, cyber and property risks. Insuring homes and MSMEs, he said, is becoming increasingly critical as climate-linked events, rapid urbanisation and rising asset ownership heighten vulnerability, particularly in Tier 2 and Tier 3 regions.

To move the sector from reform to measurable outcomes, Jain outlined three priorities for the Budget. First, he said India must accelerate digital infrastructure to cut friction, fraud and administrative costs. Full funding and a time-bound nationwide rollout of the National Health Claims Exchange (NHCX) is essential for real-time data exchange, while Bima Sugam, launched in 2025 and expected to become fully operational in 2026, should be fast-tracked to deliver seamless e-KYC, e-policy issuance and a unified service platform. Standardised APIs and interoperable digital architecture across health, motor, home and commercial insurance can significantly reduce costs from purchase to payout, he said.

Second, Jain emphasised strengthening domestic reinsurance and providing regulatory stability to support innovation. Incentives to build homegrown risk capital, promote advanced underwriting and support technologies such as telematics, AI-led risk scoring and satellite-based property assessment would accelerate industry maturity.

Climate risks

Third, he called for building climate and MSME resilience at scale through a National Catastrophe Risk Pool, noting the rising frequency of floods, cyclones and heat-related losses. He suggested enabling India’s first sovereign or state-backed catastrophe bond via GIFT IFSC and providing viability gap funding for micro-insurance and parametric products in high-risk districts. Targeted Budget support for cybersecurity, data governance and insurance-focused workforce skilling would also be critical as insurers increasingly deploy AI and advanced analytics, he said.

Insurance premium

The insurance premium financing segment is also watching the Budget closely. Hanut Mehta, CEO and Co-Founder of BimaPay Finsure, said Budget 2026 could be an inflection point if policy signals support deeper insurance coverage, improved credit access and clearer digital lending norms. Better data-sharing, simplified KYC and tax clarity could help premium financing become mainstream, enabling customers to opt for adequate coverage without liquidity stress, he said.

Industry leaders said a forward-looking Budget that treats insurance as essential economic and social infrastructure—anchored in affordability, digital enablement, climate resilience and MSME protection—could significantly deepen penetration and support India’s long-term inclusive growth trajectory.