Budget 2018: NHPS, more deduction for medical expenses, 3 PSUs merger boost insurance stocks 4-7%

⇉Budget 2018: NHPS, more deduction for medical expenses, 3 PSUs merger boost insurance stocks 4-7%

The merger of three public sector general insurance companies also boosted sentiment.

ICICI Lombard, ICICI Prudential, HDFC Standard Life and SBI Lifeshares rallied 4-7 percent at close, after the Finance Minister Arun Jaitley raised limit of deduction for medical expenditure and launched National Health Protection Scheme.

The government provided some relief to senior citizen today by raising the limit of deduction for health insurance premium and/ or medical expenditure from Rs 30,000 to Rs 50,000, under section 80D.

"All senior citizens will now be able to claim benefit of deduction up to Rs 50,000 per annum in respect of any health insurance premium and/or any general medical expenditure incurred," FM said while delivering Budget speech.

Joydeep K Roy, Partner & Leader - Insurance, PwC India said this means that an additional Rs 20,000-35,000 can be favourably looked at by Individuals for allocating to health insurance premiums.

India still looks at tax benefits for insurance premium payments and this would therefore be an effective stimulus towards increase of penetration of Health Insurance, he added.

In a case where premium for health insurance for multiple years has been paid in one year, the deduction will be allowed proportionately over the years for which the benefit of health insurance is available.

The finance minister also decided to launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto Rs 5 lakh per family per year for secondary and tertiary care hospitalisation.

This will be the world’s largest government funded health care programme. Adequate funds will be provided for smooth implementation of this programme, FM said.

"The launching of the flagship healthcare scheme to cover 10 crore poor families is a great initiative. However, a lot will depend on its execution and implementation. The government is being clear on basic health insurance for indian families. This is a good move and will certainly go a long way in boosting the Indian Insurance Sector," Niraj Jain, CEO & Principal Officer of Lambach Insurance Brokers said.

Antony Jacob, CEO, Apollo Munich Health Insurance also said the NHPS is a welcome move not just to maintain a healthy India but this he believes will also create several lakh/s new jobs in the country as new healthcare facilities will come up in smaller districts and villages. This move will go a long way in empowering India's poor and underprivileged, he added.

After National Universal Health Insurance scheme, Joydeep K Roy, Partner & Leader - Insurance, PwC India said the next big step in health Insurance in India, would be to bring the health provider network under regulations and discipline which will enable the actual service delivery under one National Standard.

The merger of three public sector general insurance companies also boosted sentiment.

FM said three public sector general insurance companies National Insurance Company Limited, United India Assurance Company Limited and Oriental India Insurance Company Limited will be merged into a single insurance entity and will be subsequently listed.

"The merger of Oriental Insurance, National Insurance & United India Insurance is another good move which will not only stabilise the three public sector units but also the Insurance sector on a whole. The Insurance sector has been bleeding largely because of improper under writing. This initiative will also increase the risk taking appetite of the merged entity which is pretty less on an individual level," Niraj Jain said.

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