It’s not just health insurance premiums that are giving policyholders heartburn. Many insurers are also not passing on the benefits of the goods and services tax (GST) cut from 18% to 0% from last year to policyholders.
As many as 36% of consumers who bought or renewed an individual health or life insurance policy after the GST rate changed last year said they did not receive any meaningful benefit from the exemption. This has been revealed by a nationwide survey by community platform LocalCircles.
20,000 people surveyed
The findings of the survey, which saw responses from over 20,000 people from over 301 districts across the country, were shared exclusively with TOI.
Matter escalated to IRDAI
The platform has now escalated the matter to Insurance Regulatory and Development Authority of India (IRDAI) chairman Ajay Seth and finance minister Nirmala Sitharaman.
The letter, which LocalCircles sent on Monday, points out that GST was removed on personal life and health insurance policies from Sept 2025, but some insurers have offset the relief by increasing the base price of policies.
According to the survey, 48% of respondents said the full benefit of the lower tax was passed on when they purchased or renewed a policy. Another 26% said no benefit was passed on because insurers raised the base price, apart from the annual premium increase. Another 5% said some benefit was passed on but the base price was partially raised, while another 5% said no benefit was passed on and 18% GST was still levied.
LocalCircles, in its letter said many policyholders now believe they are paying significantly more while getting less in return. The platform called for a review of premium increases, claim processing timelines and approval practices, and compliance with GST reduction pass-through requirements.
1 in 3 still not getting benefit of rate cut, says survey
“When LocalCircles did the survey in Nov last year, 43% respondents who had renewed their policy confirmed not getting any benefit of GST rate reduction. That number has dropped to 36% in March which shows minor improvement,” said Sachin Taparia, founder of LocalCircles.
“However, 1 in 3 still not getting the benefit of GST rate reduction is significant and warrants govt action,” Taparia said.
The platform also pointed out to the regulator and the finance minister that seven in 10 personal health insurance policyholders reported cumulative premium increases of 50% to 200% since 2022.
“Respondents also reported a steady erosion in policy value, citing exclusions for newer treatments, the introduction of co-payments and higher deductibles. That combination is feeding a deeper sense of disillusionment, especially among younger buyers who are beginning to question whether health insurance remains worth the cost in its current form,” the letter said.
The larger survey also flagged delays in cashless claim processing despite IRDAI’s direction that such claims should be adjudicated within 3 hours.
Some 5 in 10 respondents who filed a claim said the approval and discharge process took between 6 and 48 hours.
Source from: https://timesofindia.indiatimes.com/city/hyderabad/gst-slashed-but-health-insurers-not-passing-on-benefit-to-people-finds-survey/articleshowprint/129351573.cms
