Insurance agents body seeks GST cut on health plans to 5% from 18%
Out-of-pocket expenses for health remains at 48.2 per cent thus pushing the poor common man to pay a hefty medical bill and leaving the senior citizens who have taken health insurance to the pathetic plight of being forced to pay a premium of 12,000 to 15,000 per lakh out of their nominal income resources
image for illustrative purpose
The Confederation of General Insurance Agents Associations of India, an umbrella body of non-life insurance agents has urged the government to reduce the existing GST on individual health insurance policies to five per cent so as from 18 per cent to attract and encourage larger sums of people to avail these policies as a measure of social security.
A memorandum was submitted to the Finance Minister, marking a copy to the Prime Minister, Chief Ministers of All States, UTs, GST Council and the Parliamentary Standing Committee on Finance as well as all stakeholders.
Talking to Bizz Buzz, KC Lokesh, Member Executive Committee and Convener, Confederation of General Insurance Agents Insurance Association of India, said, “In the memorandum, the Confederation had pointed out that though the gross premium during last five years had almost doubled, leading to the growth of health insurance business in the country, the virtual number of lives covered and number of policies issued remained very meagre.”
Out-of-pocket expenses for health remains at 48.2 per cent thus pushing the poor common man to pay a hefty medical bill and leaving the senior citizens who have taken health insurance to the pathetic plight of being forced to pay a premium of 12,000 to 15,000 per lakh out of their nominal income resources. Further, the fact that stagnancy factor in the share of health insurance was restricted only five states in the entire country was also highlighted.
Vast areas of the remaining States remain under penetrated pushing the new tax regime aimed at attracting more taxpayers benefit of deduction u/s 80D of Income Tax Act to also become redundant, he said.
In the last five years from FY19 to FY23 retail health insurance policy growth is at11.22 per cent, number of lives covered growth is at 12.57 per cent but the gross retail premium has grown at a staggering 98.38 per cent.
Looking at premium growth alone is misleading because this is due to hike in insurance premium due to the pandemic and healthcare inflation at 11 per cent.
“Portfolio of health insurance in the General Insurance industry is very significant for the benefit of masses. But sadly, the renewal rate of the policies is alarmingly declining due to frequent premium hikes and medical inflations,” said Sudipta Sankar, Co-Convener of the federation.
The share of health insurance premium in the States from FY19 to FY23 is almost same on average: Maharashtra is at 31 per cent, Karnataka at 11 per cent, Tamilnadu at 10 per cent Gujarat and Delhi each at 7 per cent and rest of India at 35 per cent. This trend hampers the mission of insurance for all by 2047.
GST levied on insurance in the country being highest in the world, needs to be addressed by the government to keep up to the goal of ‘insurance for all by 2047’ which was endorsed by the standing committee on finance in its sixty-sixth report submitted to both the houses of Parliament on February 6, 2024, recommending rationalising GST on health insurance.
