With India’s Union Budget 2026 approaching, insurance executives across health, life, and general lines are outlining a set of tax, GST, and regulatory proposals they say would support growth and the “Insurance for All by 2047” agenda. For regional and global players with Asian operations, the outcome is likely to influence decisions on product strategy, distribution, and capital allocation in India.

Medical inflation reshapes health insurance tax priorities

According to a report by CNBCTV18, health insurers continue to identify medical inflation as a core issue affecting product design and household budgets. Srikanth Kandikonda, chief financial officer at ManipalCigna Health Insurance, noted that medical inflation in India is projected at 11.5% to 14%, among the highest in Asia, putting “sustained pressure on household finances.” He said earlier policy measures, including GST relief on select products and the move to 100% foreign direct investment, have supported access but have not offset the impact of rising healthcare costs on coverage adequacy. Kandikonda said higher public spending on health, stronger primary care networks, and a greater emphasis on prevention could help reduce long-term treatment costs. He also called for expanded tax benefits for outpatient (OPD) care and preventive health checks above the existing Section 80D caps.

Several industry participants are seeking higher Section 80D thresholds to align tax policy with current sums insured. Rajendra Upadhyaya, chief growth officer at Choice Insurance Broking, said a ₹10 lakh family health cover typically exceeds the available deduction and recommended revising the limit to ₹50,000 for individuals and ₹1 lakh for senior citizens. Offering a different calibration, Shikha Bhatia, associate professor of finance and accounting at IMI Delhi, suggested Section 80D deductions be raised to ₹40,000 for individuals and ₹80,000 for senior citizens to track healthcare cost trends more closely.

From a general insurance perspective, Subrata Mondal, managing director and CEO at IFFCO-TOKIO General Insurance, said recent GST rationalisation on health policies has given some relief to policyholders and “could improve penetration.” He added that, in his view, there is still a case for doubling 80D limits, and he called for greater allocations to crop and climate risk insurance, expanded coverage under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the formation of disaster and catastrophe pools.

Broader tax incentives sought for risk and retirement products

Life insurers and investment-focused players are asking the government to revisit how tax incentives are structured across life, protection, and retirement products as incomes rise and household balance sheets change. From a macro and fiscal standpoint, Ajit Banerjee, president and chief investment officer at Shriram Life Insurance Company, said the government is expected to continue balancing fiscal consolidation with growth. He pointed to potential higher allocations for defence, railways, shipbuilding, alternate energy, education, and coordinated health initiatives under the National Health Mission. Within this, he emphasised the need to enhance insurance-related deductions, either by lifting Section 80C limits or creating a distinct section for insurance premiums to support penetration.

In the life segment, Alok Rungta, managing director and CEO at Generali Central Life Insurance, said current limits on tax concessions for life and retirement savings do not fully reflect today’s income profiles or life-stage needs. He said simplifying tax rules, promoting pure protection plans, and incentivising long-term savings could improve customer participation, while continuity in policy would help insurers plan their capital and product pipelines.

Intermediaries are also asking for clearer, higher tax incentives targeted at term life and other pure protection covers. Prantik Mitra, director in the client advisory group at Alliance Insurance Brokers, said Budget 2026 should build on the 2025 changes, such as 100% FDI and GST exemptions, by advancing composite licensing and specifying tax treatment for different product categories. That, he said, could improve operating efficiency and encourage first-time buyers to prioritise risk protection over savings-linked policies.

Focusing on middle-income households, Vaibhav Kathju, founder and CEO of Inka Insurance, said the Budget presents an opportunity to increase adoption of protection products by expanding tax benefits for health and term insurance and by encouraging earlier entry into the risk pool. He added that dedicated tax sections for pure protection, supported by digital-first distribution and financial literacy efforts, could help raise protection levels in India.

GST and input tax credit structures remain a key concern

While GST exemptions on specified retail health and life products have reduced the tax paid by customers, brokers say the current structure is affecting how insurers and intermediaries manage costs and investment. Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), highlighted that insurers are unable to claim input tax credit on exempt products. As a result, GST incurred on distribution, servicing, and technology outlays is embedded in premiums, he said, which brokers argue can limit how much carriers and intermediaries invest in expanding reach and digital systems. Bharindwal proposed either granting input tax credit on these costs or introducing a phased offset mechanism. He also pointed to the potential for deeper public–private partnerships across health, MSME, climate, and catastrophe risks.

From a consumer and prevention standpoint, Ankita Srivastava, general manager for growth and strategy at The Healthy Indian Project, said GST exemption has helped increase awareness of insurance, but that “deeper reforms are now required.” She cited tax incentives for risk protection, regulatory support for microinsurance, distribution reforms, quicker grievance handling, and clarity on composite licensing as priorities for strengthening consumer outcomes and trust.

Digital infrastructure and premium financing gain prominence

Stakeholders are focusing on digital infrastructure as a supporting element for India’s 2047 coverage goals. Sharad Mathur, managing director and CEO at Universal Sompo General Insurance, said achieving Insurance for All by 2047 will require a time-bound plan backed by shared digital insurance systems and cost-efficient distribution structures. He pointed to ongoing gaps in insurance literacy, especially in rural and low-income communities, and said sustained funding and greater private sector participation in government schemes could help narrow protection gaps.

In parallel, premium financing providers are seeking to play a larger role in keeping policies in force and supporting higher coverage levels. Hanut Mehta, CEO and co-founder of BimaPay Finsure, said Budget 2026 “could be an inflection point” if policy signals support wider insurance coverage, easier access to credit, and clearer norms for digital lenders. He added that better data-sharing, simplified know-your-customer (KYC) processes, and tax clarity could help make premium finance a more common option, allowing customers to maintain cover without short-term liquidity strain.

‘Insurance for All by 2047’ regulatory agenda

Alongside the Budget debate, the Insurance Regulatory and Development Authority of India (IRDAI) is pursuing a multi-year regulatory programme intended to broaden access and strengthen the sector’s competitiveness. IRDAI has committed to enable “Insurance for All” by 2047, with every citizen having appropriate life, health, and property protection and every enterprise supported by suitable risk solutions. To reach this target, the authority is working on a regulatory architecture that it describes as progressive, supportive, and facilitative, aimed at expanding product choice, access, and affordability while aligning with the government’s financial inclusion goals.

The regulator’s framework focuses on three pillars: policyholders, insurers, and distributors. Its priorities include matching products to customer segments, strengthening grievance redressal mechanisms, simplifying the ease of doing business, and aligning regulations with changing market conditions. IRDAI is also moving toward a more principle-based regime intended to encourage innovation, competition, and distribution efficiency while integrating technology more deeply into supervision and market conduct.