Recommended a reduction in GST rates applicable to various health insurance products, including retail policies for senior citizens and micro-insurance policies, along with term policies
The Standing Committee on Finance has recommended a reduction in the Goods and Services Tax (GST) rate on insurance products, particularly focusing on health and term insurance, which currently stands at 18 percent.
Chaired by Jayant Sinha, the committee highlighted the burden of high premiums due to the prevailing GST rate, which acts as a deterrent to obtaining insurance policies.
To enhance affordability, the committee proposed a reduction in GST rates applicable to various health insurance products, including retail policies for senior citizens and micro-insurance policies, along with term policies.
Despite the dynamic growth witnessed by India’s insurance industry in recent years, the penetration and density of Indian insurance products remain relatively low compared to advanced economies.
In 2020, the Indian insurance sector accounted for approximately 2 percent of the global insurance market, indicating substantial room for growth.
According to Swiss Re data, India ranked tenth in the global insurance business in 2021, with a market share of 1.85 percent. Total insurance premiums in India saw a significant increase of 13.46 percent in 2021, reflecting positive growth momentum.
However, India still holds the ninth position globally in the life insurance business and the fourteenth position in the non-life insurance business.
To address these challenges, the committee emphasized the urgent need to promote insurance protection across diverse products, not limited to life insurance alone. They recommended launching an awareness campaign to educate consumers about the benefits of different insurance products, highlighting instances such as insurance claims during COVID, floods, and cyclones.
This campaign, proposed to be jointly conducted by insurance companies and the Insurance Regulatory and Development Authority of India (IRDAI), would feature life, health, and general insurance products.
Additionally, the involvement of reputed celebrities endorsing various insurance products like motor, home, and health insurance would encourage the general public to prioritize family security through insurance coverage.
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