Hopeful for tax relief on insurance products, says ACKO CEO Varun Dua

Nation Wants to Grow: To improve insurance penetration and affordability in India, the insurance industry is looking forward to tax relief on insurance products. Varun Dua, Founder and CEO of ACKO Insurance in an exclusive conversation with Republic Business “Nation Wants to Grow” highlighted key areas where changes could benefit both the industry and consumers.

One of the primary concerns is the high Goods and Services Tax (GST) on life and health insurance products. "We are one of the few countries in the world, unfortunately, that still tax life insurance and health insurance at 18 per cent GST," Dua pointed out. 

He underlined that taxing these essential products akin to sin taxes could deter citizens from securing necessary health and life protection. "If we want health protection for the country, life protection for the country, so that citizens are well covered and they do not fall into financial stress... we cannot be taxing these products like Syntax," he added.

Dua believes that reducing GST on insurance products would align with the government's goal of increasing insurance penetration. "Reducing GST on products like health insurance will go a long way in helping citizens make the products more affordable," he stated.

Range of products under universal licence 

Another major development on the horizon is the potential for insurance companies to offer a wider range of products under a universal licence. This change would allow a single company to offer both general and life insurance, enhancing efficiency and product diversity. 

"The government is contemplating allowing universal licenses, which is a general insurance company and a life insurance company could be a single company rather than having to be two separate legal entities," Dua explained. He noted that this move would require changes to the Insurance Act and would need to be implemented through the budget.

On the technological front, Dua underscored the importance of creating a central repository for insurance fraud data. "India is also one of the few countries where insurance fraud is rampant. People misuse insurance, and there are no penalties," he remarked. He advocated for building robust fraud databases and sharing information between insurers to tackle this issue effectively. 

Streamlining insurance processes 

Additionally, initiatives like the Health Claims Exchange by the National Digital Health Mission (NDHM) are crucial for streamlining processes. This platform aims to unify hospitals and insurers, reducing discrepancies in billing and expediting claim settlements. "Today, we are not on the same platform, so every bill looks different. And when every bill looks different, it takes a lot of time to process," Dua explained.

To drive down insurance costs, Dua suggested adopting a model similar to the banking sector, which includes universal banks, small finance banks, and payments banks. "I think what the industry and the government can do together is really bring down the cost of insurance for customers," he said.

Moreover, Dua highlighted the need for a mass awareness campaign to increase insurance penetration, similar to the successful campaigns for mutual funds in India. "We are seeing record inflows into the equity markets in India... I don't think that level of penetration is possible in insurance unless the insurance industry also comes together along with the government," he stated.

Journey of Varun Dua

Varun Dua, born on 25th February 1981 in Delhi, has over a decade of experience in the insurance sector, where he has specialised in marketing analytics for direct business acquisition and leveraging technology for effective customer service.

Varun completed his bachelor's degree from the University of Mumbai and went on to earn a Master's Degree from the MICA, Ahmedabad. After graduation, Varun started as a trainee at Leo Burnett Advertising for less than a year. He then served as a marketing manager at TATA AIG Life Insurance and Franklin Templeton Investments.

Harnessing his knowledge of insurance products and the digital medium, Varun founded ACKO Insurance. Dua has secured $30 million in funding from investors for the ACKO project.