With Covid pandemic still playing havoc in the country, the insurance sector is pushing for a reduction in the GST on health policies to bring more people under the insurance umbrella.
Overtaking the motor segment, the health sector has already become the fastest growing segment in the insurance sector after the pandemic hit the country in March 2020 and medical costs surged.
Currently, protecting health is paramount and in this context, a health insurance should be viewed as an essential commodity, insurance experts said. “I would request the Finance Minister to consider the reduction of GST for health insurance from the current 18 per cent to the lowest slab of 5 per cent. This move will also make health policies more affordable and push more and more people to buy a health cover,” said Shanai Ghosh, Executive Director & CEO, Edelweiss General Insurance.
“The government should consider a drastic reduction in the GST applicable on health insurance premiums which is currently charged at 18 per cent. This will encourage people to purchase health insurance and additional top-up plans to protect themselves from medical crises and emergencies,” said Roopam Asthana, CEO & Whole-Time Director, Liberty General Insurance.
Covid has shaken people and made them realise the importance of having a health insurance, insurance experts said. However, to close down on the gap between realisation and intention to actually buying health insurance, it would really help if the government could consider increasing the tax deduction limit under section 80D of the Income Tax Act for health policies. Given the high medical costs, a higher tax rebate will ensure more disposable income with the growing middle class, thereby encouraging them to buy the much-needed health policy, Ghosh said.
“In the upcoming union budget, we request the government to intensify steps towards increasing insurance penetration in the country, since even a large part of the population in the country still remains underinsured or uninsured,” Asthana said. As per IRDAI’s Annual Report-2020-21, insurance penetration in India stands at 4.2 per cent of the GDP as against the global average of 7.4 per cent, and as of March, 2021 the non-life insurance penetration in India stood at barely 1 per cent.
