‘Insurance Industry Calls For Reduction In GST On Health Plans'
The Confederation of General Insurance Agents' Associations of India, representing insurance agents across the country, has requested the government to lower the goods and services tax (GST) on individual health insurance policies from 18% to just 5%. Their aim is to encourage greater uptake of these vital plans and help more people access affordable healthcare security.
Health insurance is a sizable portfolio for insurers, with over Rs.109,000 crores collected in premiums last fiscal year alone. However, renewal rates are falling at an alarming pace due to frequent premium hikes and escalating medical costs. Out-of-pocket medical expenses also remain staggeringly high at 48.2% on average. This places significant financial burden on many struggling to pay exorbitant medical bills or afford policies costing Rs.12,000-15,000 per senior despite meager incomes.
While the sheer amount of premiums collected has doubled in the last five years, the real number of lives covered and polices issued is still minimal. Vast regions outside the top five insured states also suffer from poor penetration. This undermines efforts to offer tax deductions under section 80D of the Income Tax Act for health plans.
With India's GST on insurance amongst the highest globally, the confederation rightfully advocates rationalization is needed to fulfill the national goal of ‘Insurance for All by 2047' as endorsed by a parliamentary panel. However, reducing duties alone may not translate into actual customer benefits unless insurers reasonably share the savings too.
Consumers and the overall insurance sector now eagerly await positive changes to boost accessibility and uptake of these crucial financial safety nets for healthcare costs.
