New Delhi: The government has directed insurance companies to proactively undertake outreach campaigns to publicise GST reforms and pass on the benefits to policyholders.
M. Nagaraju, Secretary, Department of Financial Services (DFS), chaired a meeting with senior officials of DFS, IRDAI, CMDs of public sector insurance companies and CEOs of leading private sector life and non-life insurance companies and officials from Life Insurance Council and General Insurance Council here.
The secretary highlighted prospective positive impact of the GST reforms in making insurance more affordable and accessible for the common man.
The measure is expected to make insurance more accessible and cost-effective, thereby strengthening financial security and enhancing insurance penetration across the country, according to a Finance Ministry statement.
The meeting was held in pursuance of the exemption of GST on all individual life and health insurance policies as approved by the GST council in its 56th meeting.
During the meeting, the Secretary emphasised the importance of ensuring that the benefits of the tax reduction are fully passed on to both existing and prospective policyholders.
The GST rationalisation on life and health insurance premiums will significantly improve affordability, strengthen penetration and provide a boost to consumption ahead of the festive season.
Health and life insurance, which earlier attracted 18 per cent GST, have now been moved to the nil tax category.
According to a report by rating agency ICRA, policyholders will benefit from lower premiums.
In general insurance, the retail health segment which accounted for 16 per cent of the industry’s gross direct premium income (GDPI) in FY25, will see premiums come down, though profitability of standalone health insurers may be under pressure if the full benefit is passed on.
The nil rate for health insurance premiums is poised to enhance affordability and accessibility for patients. As health insurance penetration further improves, it will, in turn, benefit the hospitals sector.
In the long run, this step aligns with the government’s vision of making healthcare more inclusive and affordable, according to the report.
(IANS)
