As Union Budget 2026 approaches, tax experts are advocating for significant enhancements to the new tax regime, with key demands including integrating deductions for home loan interest and medical insurance. Medical inflation in India, projected at 11.5%-14% annually, is placing significant pressure on household finances, fueling strong demand for tax relief measures. Prashant Mishra, founder and CEO of Agnam Advisors, proposes simplifying the new tax regime by integrating essential deductions, including raising the limits for medical insurance under Section 80D to ₹50,000 for self/family and ₹1 lakh for senior citizens. These changes would ease compliance burdens and offer equitable relief, enabling families to allocate more towards productive investments while addressing escalating living costs.
The insurance industry has presented comprehensive expectations for Union Budget 2026, with climate insurance incentives emerging as a top priority. According to latest industry recommendations, the sector seeks sovereign reinsurance backstops or co-funding guarantees for climate-linked and parametric insurance pilot schemes. This initiative aims to de-risk insurers entering new product lines while reducing post-disaster relief burden and strengthening agricultural and coastal resilience. As reported by The Economic Times, New India Assurance recently launched parametric insurance product 'Nischit Suraksha' for climate risks, which is finding good traction in the market. Girija Subramanian, Chairman-cum-Managing Director of The New India Assurance Co. Ltd., highlighted that parametric insurance provides immediate relief to affected people during catastrophic events. The company expects Budget 2026 to include budgetary allocation for a specific fund for purchasing conventional NATCAT covers or parametric covers, along with access to government datasets from IMD, ISRO, CWC at affordable or zero cost.
Public health expenditure in India remains below global benchmarks and national policy targets, with experts calling for enhanced budgetary allocation. Srikanth Kandikonda, Chief Financial Officer at ManipalCigna Health Insurance, suggests increasing the budgetary outlay for public health to bolster primary care networks and alleviate financial stress on citizens. He emphasized that introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits under Section 80D, would encourage wider adoption of preventive care and significantly aid senior citizens. These measures aim to address the substantial protection gap in health coverage while combating rising medical costs that are pressuring household finances across the country.
Recent industry recommendations emphasize R&D incentives for insurers adopting AI, IoT, and alternative data for underwriting and fraud detection. The sector proposes creating a joint public-private Insurance Data Exchange Hub integrating various data sources under privacy-preserving architecture. Enhanced oversight mechanisms for hospital pricing and integration of the National Health Claims Exchange (NHCX) with direct audit trails are key expectations, targeting faster settlement processes between insurance companies and hospitals with penalties for delayed settlements. As reported by The Economic Times, New India Assurance is already leveraging technology in areas like automatic claim processing to provide quick service to the insured. The company outlined a dual approach using both physical and digital modes - physical mode involving recruitment of agents in rural areas for pre-underwritten products, and digital mode using technology to sell byte-sized insurance covers addressing specific needs.
According to The Economic Times, internal market scans by New India Assurance revealed that less than 15% of India's 66 million MSMEs are adequately insured despite more than 70% having experienced operational or climate-related shocks in the past three years. Affordability remains a major reason for MSME units to remain uninsured, with the company suggesting that similar to the MSME credit guarantee scheme, the government could consider support for MSMEs to purchase relevant insurance products. Through simplified products and distribution norms and a lower GST rate, the government can make insurance products affordable to the MSME sector and bridge the protection gap. Subramanian emphasized that budgetary support to rural Bima Vahaks until they scale up would significantly help in increasing insurance penetration and realizing the government's vision of 'Viksit Bharat – 2047'. These comprehensive expectations reflect the industry's commitment to achieving the government's 'Insurance for All by 2047' vision while addressing the substantial protection gap in health, life, and catastrophic event coverage across the country.
