Budget 2023 Expectations: Govt needs to revisit tax exemption limits to make insurance buying lucrative: Niraj Shah, CFO HDFC Life

Budget 2023 Expectations: Government needs to review its exemption limits under Section 80C and for pension products to make them more lucrative for the policy seekers, Niraj Shah, Chief Financial Officer at HDFC Life Insurance Company tells Zee Business Web Team.       

Lot of people see tax as a way of evaluating insurance products and some of the exemption limits need to be reviewed in terms of Section 80C or increase in exemption limits of pension products which are made available to senior citizens, he said. The latter are unfortunately taxed twice, he added. 

He said that tax benefits to people will not only ease government’s own burden but also make it lucrative for them to take it. 

Emphasising on the importance of these measures, Shah said that the government must do everything that can be done to support insurance penetration and growth. Amid very less social security, low awareness and affluence, 70 per cent of the expenses are out of pocket.

The company has advanced on the dematrialisation front – a regulatory requirement mandated by the insurance regulator. “As of now 40 per cent of our policies are in that form,” he said adding that the HDFC Life is going ahead and pushing its partners to achieve 100 per cent. 

Insurance Premium Price Trajectory

Shah also assured potential policy buyers of not implementing any further premium hikes over a near term. The company has already had a couple of rounds of premium reset in line with the price requirements, the CFO said. 

The company plans to go deeper into tier-2 and tier-3 markets and expand business beyond the salaried class of certain income profile, he added. As the profile changes, the risks associated with them will also keep changing and the pricing will be reflected in those changes, he informed.  

“That happens in all businesses where input costs determine the final pricing. For us, the input is the risk and as it goes up the premium is expected to go up,” Shah said. 

Q3FY23 Earnings   

The company delivered consistent performance across all key metrics, it said in its filing to the exchanges. The private market share stood at 15.8 per cent while value of new business (VNB) registered growth of 22 per cent for the 9-month ended 31 December 2022. Profit After Tax was at 18 per cent during this period. Operating ROEV stood at 17.5 per cent over the 9-month period ended 31 December 2022. The company reported a 52 per cent growth in credit protect business, the company filing said.  The quarterly earnings were declared on Friday, 20 January, 2023. 

“It has been a very good quarter on the overall delivery. We have grown faster than the sector in the quarter.  Growth in the quarter has been 25 per cent. VBN growth has been 22 per cent. We are expanding distribution we had a tie-up with AU small finance bank overall we believe it has been a good quarter,” Shah said.

Finance Minister Nirmala Sitharaman will be presenting her last full Budget of the Narendra Modi 2.0 government before the country goes for general elections, next year. Ahead of the Union Budget, FM Nirmala Sitharaman will perform the annual budget ritual of 'Halwa Ceremony' on the occasion of 74th Republic Day in the Budget Press situated inside North Block.