Budget 2021 Impact On Insurance Sector - Tax Exemption Was Never The Main Business Proposition, Says ICICI Securities

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ICICI Securities Report

With government lifting tax exemptions on unit linked insurance plan returns for all prospective policies with aggregate annual premium of more than Rs 250,000 (as a portfolio) in Budget 2021, the available universe of ULIP business reduces for Indian life insurers, especially in high net worth/affluent category.

Diversified insurers with a wider reach will have relatively lower impact. Though the impact on value of new business is small, it is incrementally negative for life insurers.

However, increase in foreign direct investment limit in insurance from 49% to 74% is structurally positive.

Life Insurance Corporation of India’s IPO remains a big bang event.

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