Key Changes That the Insurance Industry is Expected to Witness in 2023

The announcement of the Budget 2023 is only a few weeks away and different industries including insurance are expecting some transformative reforms. Just like the past year, when there were major reforms in insurance laws, 2023 is predicted to bring further amendments in the interest of policyholders. As per the latest reports, the Budget Insurance Amendment Bill, prepared by the Department of Financial Services (DFS) and Insurance Regulatory and Development Authority (IRDA) is expected to be released in the upcoming budget of 2023.

From changes in the capital requirements, tax deductions, and solvency ratio, to more, there are different areas in which the insurance industry might expect reforms. The leaders of the insurance industry are expecting the minimum capital requirement to come down from the present Rs 100 crore. Even the solvency ratio which indicates the financial strength of the insurer is expected to go down from 1.5. Moreover, there are discussions ongoing to issue one license for all kinds of insurance products. With a single/common license, it will become easier for insurance companies to sell a variety of insurance products such as life insurance, travel insurance, health insurance, and others. The Department of Financial Services in collaboration with the Insurance Regulatory and Development Authority is also planning for a one-time license rule as opposed to the present where the insurance license needs to be renewed annually. 

As per earlier reports, insurers have also demanded to increase the existing quantum of tax deductions on health insurance premiums, annuity plans, and more so that the tax liability is reduced. Thus, the upcoming budget of 2023 is expected to bring a lot of changes in the insurance industry.

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