Insurance companies witnessed a slew of regulatory changes in the sector in 2018. These included changes in the product structure in life, health and motor insurance products that impacted the way these features were structured in the policy.
The major changes — both implemented and proposed — have an impact on the existing and potential policyholders. Below are the top developments in the insurance sector in 2018
Tax deduction benefits for senior citizens
The union budget increased tax deduction benefits for elderly people, which will offer dual benefits to retired citizens. This benefit includes a health cover providing medical treatment expenses incurred on specified diseases for senior citizens to Rs 1 lakh and tax savings of up to Rs 50,000 under Section 80DDB of the Income Tax Act at the same time.
Previously, a taxpayer could maximize tax benefit under Section 80D to a total of Rs 55,000 if his/her age is below 60 years, while parents' age is above 60. For those taxpayers who are above the of age 60 and are also paying the health insurance premium for their parents, the maximum tax benefit would be a total of Rs 60,000 under section 80D. The table below can be referred to while claiming tax deductions under section 80D for FY 2018-19.
Long-term third-party motor insurance made mandatory for cars, bikes
The Supreme Court made it mandatory for all car owners to take three-year motor insurance cover and five-year cover for bikes, from September 1. This led to an immediate increase in the price of motor insurance policies and hit auto sales since the covers were made mandatory.
Devendra Rane, Founder, and CTO at Coverfox.com said that vehicle owners get cover for a longer period along with freedom from the hassle of yearly renewals, the insurers got a chance to rein in the lapsation ratio. "However, vehicle owners will have to bear the higher outflow of premiums right at the time of purchasing their vehicle," he said.
Compulsory personal accident cover for owner-driver
The Insurance Regulatory and Development Authority (IRDAI) also gave motor vehicle owners a reason to cheer. The mandatory third-party insurance cover along with personal accident cover for vehicle owners-drivers has been unbundled.
Personal accident cover — which was mandatory in every third-party insurance cover — will now be available as a standalone policy and you only need to buy it once, as opposed to for every vehicle you have owned earlier.
Proposal to trim health insurance exclusions
Insurance Regulatory and Development Authority of India (IRDAI) released a report on the standardization of exclusions in the health insurance space. On one hand, this was intended to improve transparency in the sector, but on the other, there is a fear that riskier customers would be excluded from the system.
Life insurance plans to see a makeover
In its draft regulations on life insurance products released in November, IRDAI has said that companies will be able to offer flexible policy tenures for certain products. IRDAI said that insurers can design term, credit life and micro-insurance products that have a range of policy tenures to choose from. However, these regulations would mean that insurers will have to withdraw existing products and re-launch new ones with appropriate features.