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The Government should bring down the existing GST (Goods & Services Tax) on individual health insurance policies to 5 per cent from the existing 18 per cent to encourage people to buy these policies as a measure of social security, the Confederation of General Insurance Agents’ Associations of India appealed to the Government.
The umbrella body of non-life insurance agents highlighted that the premium of health insurance has nearly doubled in the last 5 years, driving the growth of the segment. However, the virtual number of lives covered and number of policies issued still remained small. According to the association, renewal rates of the policies also continued to decline on account of frequent premium hikes and rising medical inflation.
In a letter addressed to the Union Finance Minister urging for a revision in GST rates, the association pointed out that the average percentage of renewal of retail health insurance policies is at 65 per cent – 75 per cent. From this, it is very much evident that most of the policyholders are not able to pay the premium due to frequent hike in insurance premiums and very high rate of GST.
The GST rates charged by India on insurance is the highest as compared to tax rates imposed by other countries. Senior citizens need to spend an average Rs 12,000 – Rs 15,000 for a health insurance coverage worth Rs 1 lakh, the letter noted. Citing the importance of health insurance, weak penetration, declining renewal rates, higher GST rates among other reasons, the association has urged the Government to reduce the rates.