The Insurance Brokers Association of India (IBAI) has urged the Ministry of Finance to adopt additional measures beyond the recent Goods and Services Tax (GST) reforms to enhance health and life insurance penetration across the country.
While the GST exemption on individual health insurance premiums is expected to boost coverage to some extent, the association said that large sections of India’s vulnerable and marginalised population still remain outside the insurance net.
To address this gap, IBAI has proposed introducing “soft mandates” that would embed suitable insurance covers into financial products such as Mudra Loans and Pradhan Mantri Awas Yojana (PMAY), ensuring small and marginalised borrowers are automatically brought under protection.
“Our thought process is that a 1% direct debit from the borrower’s loan amount towards the insurance premium would be sufficient to create a 360-degree cover—encompassing health, life, personal accident, benefit-based business interruption, and property insurance for the assets financed by the loan,” said President of IBAI.
He noted that individuals at the bottom of the socio-economic pyramid remain highly vulnerable, as they rarely purchase insurance voluntarily.
“It has to be a soft mandate to ensure insurance reaches them because they will not buy on their own. Once they experience the benefits firsthand, trust will be built in the system and voluntary participation will follow,” he added.
Currently, only about 5.5 crore individuals are covered under health insurance policies, according to IBAI estimates.
The association further suggested that the government need not offer subsidies for insurance premiums. Instead, the payment of premiums for vulnerable segments could be recognised as an eligible Corporate Social Responsibility (CSR) activity, allowing companies to channel CSR funds toward expanding insurance coverage.
IBAI has also offered to assist the Ministry of Finance, the Insurance Regulatory and Development Authority of India (IRDAI), and other stakeholders with data, research insights, and coordination support.
The appeal comes shortly after the 56th GST Council meeting, where the government announced a full GST exemption on individual health insurance premiums effective September 22, compared with the earlier 18% tax rate.
