The waiver of Goods and Services Tax (GST) on individual health insurance premiums has led to a 20 per cent increase in the sale of health cover in October, the first full month in the new tax regime. Addressing a long-pending demand, the Centre has waived 18 per cent GST on individual health and life cover policies, which came into effect from September 22.
“The GST reduction on health insurance has been a meaningful step towards improving affordability and driving wider adoption. On a year-to-date basis, policy issuances are up 20 per cent and premiums nearly 10 percent,” Chief Distribution Officer – Retail Business, Bajaj General Insurance (formerly Bajaj Allianz General Insurance Company), told businessline on Wednesday.
Policy support
The shift reflected how a supportive policy environment can strengthen insurance penetration and encourage more people to prioritise financial protection for their health, he added.
According to the MD & CEO of a major general insurance company, the average growth in sale (premium) of health policies across the insurers due to GST waiver was above 20 per cent, while the growth percentage could vary from company to company after factoring in the normal growth of the segment.
Data from the Insurance Regulatory and Development Authority of India (IRDAI) also indicate the surge in Gross Direct Premium (GDP) underwritten by non-life insurers. The growth rate was higher at 38 per cent for standalone health insurance players.
The spike in health premiums had actually helped the overall premium growth in October, which would have been lower than ₹29,604 crore against ₹29,593 crore in the same month last year. It would have become almost negative without the surge in GST for health insurers.
“The first full month post-implementation, October has shown strong traction. Industry data indicate that health insurance premium collections grew reflecting renewed retail demand as families opted for higher coverage and fresh enrolments spiked during festive renewals,” President, Insurance Brokers Association of India (IBAI) said.
The brokers and advisors were witnessing a renewed wave of retail interest, especially among middle-income and senior-citizen segments, he said, adding: “However, since insurers can no longer claim Input Tax Credit (ITC), some are recalibrating commission structures — this area needs monitoring to maintain balance across the distribution value chain.’’
While the health segment premium surged, life insurance new business premiums showed a mild short-term adjustment due to transitional recalibration by insurers and agents. This is expected to normalise as the industry adapts to revised pricing and billing systems under the GST-free regime, according to experts.
Source from: https://www.thehindubusinessline.com/news/gst-waiver-pushes-health-cover-sales-by-20-in-october/article70271324.ece
