Union Budget 2026: Insurance industry calls for tax breaks, reforms to reach 'Insurance for All'
With Budget 2026 around the corner, the insurance industry is urging the government to move past incremental changes and push deeper reforms. From tax relief to digital infrastructure and preventive care, the industry says decisive action is needed to widen coverage and close protection gaps.
- Jan 13, 2026,
- Updated Jan 13, 2026 2:40 PM IST
As the Union Budget 2026 approaches, leaders across India’s insurance ecosystem are striking a unified note: the next phase of reform must move beyond marginal adjustments and focus on affordability, access and long-term resilience if the country is to make real progress towards the goal of Insurance for All by 2047.
A central pressure point remains medical inflation, which continues to rise far faster than household incomes. Srikanth Kandikonda, Chief Financial Officer of ManipalCigna Health Insurance, estimates healthcare costs are increasing at 11.5–14% annually, among the highest rates in Asia.
While policy steps such as GST exemption on premiums and allowing 100% FDI have eased some cost pressures, he says coverage adequacy is still under strain. Kandikonda argues that higher public spending on primary care, along with a strong shift towards preventive healthcare, could lower long-term treatment costs. He also calls for wider tax incentives for outpatient services and preventive screenings beyond the current limits under Section 80D.
The conversation around Budget 2026 is not limited to healthcare alone. From a macroeconomic perspective, Ajit Banerjee, President and CIO of Shriram Life Insurance, expects the government to continue walking a tightrope between fiscal discipline and growth. While overall capital expenditure may remain constrained, he sees scope for higher allocations to defence, railways, renewable energy and coordinated public health programmes. Banerjee believes insurance penetration will improve only if tax deductions on premiums are raised—either through enhanced Section 80C limits or a separate, dedicated provision for insurance.
Structural tax challenges within the industry are also drawing attention. Narendra Bharindwal, President of the Insurance Brokers Association of India, points out that while GST exemption on retail life and health policies has helped consumers, insurers cannot claim input tax credit on the services that support these products. As a result, taxes on distribution, servicing and technology get built into premiums. He advocates a calibrated credit mechanism, along with stronger public–private partnerships in MSME protection, climate risk and catastrophe insurance.
The demand to revisit outdated tax deductions is growing louder. Rajendra Upadhyaya of Choice Insurance Broking says current Section 80D limits no longer reflect the reality of double-digit medical inflation, where even basic family floaters exceed deduction thresholds. Shikha Bhatia of IMI Delhi echoes this view, arguing that meaningful reform requires substantially higher limits that align with today’s healthcare economics.
Beyond tax policy, industry voices are calling for a sharper focus on prevention, awareness and consumer protection. Ankita Srivastava of The Healthy Indian Project believes GST relief has boosted awareness, but the next stage of reform must include incentives for risk protection, support for micro-insurance, faster grievance redressal and clearer rules on composite licensing to deepen trust.
Digital infrastructure has emerged as another key pillar of reform. Sharad Mathur, MD and CEO of Universal Sompo General Insurance, says achieving universal insurance coverage will require a clear, time-bound roadmap supported by shared digital platforms and cost-efficient distribution models. He stresses the need for sustained budgetary support for insurance literacy, especially in rural and low-income regions, and more consultative frameworks that enable greater private-sector participation in government schemes.
In the life insurance segment, Alok Rungta, MD and CEO of Generali Central Life Insurance, believes Budget 2026 offers a chance to make long-term financial protection more relevant for today’s families. He says tax concessions for life and retirement products must reflect rising incomes and evolving life-stage needs. Simplifying taxation, encouraging pure protection plans and incentivising long-term savings, he adds, could significantly narrow India’s protection gap—provided policy continuity and regulatory clarity remain intact.
Even emerging segments are watching closely. Hanut Mehta of BimaPay Finsure says clearer norms on premium financing, data-sharing and digital lending could help customers access adequate coverage without liquidity stress.
Together, these perspectives frame Budget 2026 as a potential turning point for the insurance sector—one that could shift the narrative from piecemeal relief to a cohesive reform agenda built on tax rationalisation, preventive healthcare, digital enablement and consumer-centric regulation. If executed well, industry leaders believe it could accelerate India’s transition from being under-insured to genuinely well-protected.
As the Union Budget 2026 approaches, leaders across India’s insurance ecosystem are striking a unified note: the next phase of reform must move beyond marginal adjustments and focus on affordability, access and long-term resilience if the country is to make real progress towards the goal of Insurance for All by 2047.
A central pressure point remains medical inflation, which continues to rise far faster than household incomes. Srikanth Kandikonda, Chief Financial Officer of ManipalCigna Health Insurance, estimates healthcare costs are increasing at 11.5–14% annually, among the highest rates in Asia.
While policy steps such as GST exemption on premiums and allowing 100% FDI have eased some cost pressures, he says coverage adequacy is still under strain. Kandikonda argues that higher public spending on primary care, along with a strong shift towards preventive healthcare, could lower long-term treatment costs. He also calls for wider tax incentives for outpatient services and preventive screenings beyond the current limits under Section 80D.
The conversation around Budget 2026 is not limited to healthcare alone. From a macroeconomic perspective, Ajit Banerjee, President and CIO of Shriram Life Insurance, expects the government to continue walking a tightrope between fiscal discipline and growth. While overall capital expenditure may remain constrained, he sees scope for higher allocations to defence, railways, renewable energy and coordinated public health programmes. Banerjee believes insurance penetration will improve only if tax deductions on premiums are raised—either through enhanced Section 80C limits or a separate, dedicated provision for insurance.
Structural tax challenges within the industry are also drawing attention. Narendra Bharindwal, President of the Insurance Brokers Association of India, points out that while GST exemption on retail life and health policies has helped consumers, insurers cannot claim input tax credit on the services that support these products. As a result, taxes on distribution, servicing and technology get built into premiums. He advocates a calibrated credit mechanism, along with stronger public–private partnerships in MSME protection, climate risk and catastrophe insurance.
The demand to revisit outdated tax deductions is growing louder. Rajendra Upadhyaya of Choice Insurance Broking says current Section 80D limits no longer reflect the reality of double-digit medical inflation, where even basic family floaters exceed deduction thresholds. Shikha Bhatia of IMI Delhi echoes this view, arguing that meaningful reform requires substantially higher limits that align with today’s healthcare economics.
Beyond tax policy, industry voices are calling for a sharper focus on prevention, awareness and consumer protection. Ankita Srivastava of The Healthy Indian Project believes GST relief has boosted awareness, but the next stage of reform must include incentives for risk protection, support for micro-insurance, faster grievance redressal and clearer rules on composite licensing to deepen trust.
Digital infrastructure has emerged as another key pillar of reform. Sharad Mathur, MD and CEO of Universal Sompo General Insurance, says achieving universal insurance coverage will require a clear, time-bound roadmap supported by shared digital platforms and cost-efficient distribution models. He stresses the need for sustained budgetary support for insurance literacy, especially in rural and low-income regions, and more consultative frameworks that enable greater private-sector participation in government schemes.
In the life insurance segment, Alok Rungta, MD and CEO of Generali Central Life Insurance, believes Budget 2026 offers a chance to make long-term financial protection more relevant for today’s families. He says tax concessions for life and retirement products must reflect rising incomes and evolving life-stage needs. Simplifying taxation, encouraging pure protection plans and incentivising long-term savings, he adds, could significantly narrow India’s protection gap—provided policy continuity and regulatory clarity remain intact.
Even emerging segments are watching closely. Hanut Mehta of BimaPay Finsure says clearer norms on premium financing, data-sharing and digital lending could help customers access adequate coverage without liquidity stress.
Together, these perspectives frame Budget 2026 as a potential turning point for the insurance sector—one that could shift the narrative from piecemeal relief to a cohesive reform agenda built on tax rationalisation, preventive healthcare, digital enablement and consumer-centric regulation. If executed well, industry leaders believe it could accelerate India’s transition from being under-insured to genuinely well-protected.