Insurers call for GST cut on health policies

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As the Covid pandemic continues to wreak havoc in the country, the insurance industry is pushing for a reduction in GST on health policies to bring more people back under the insurance umbrella.

Overtaking the automobile segment, the healthcare sector has already become the fastest growing segment of the insurance industry after the pandemic hit the country in March 2020 and medical costs increased.

Currently, health protection is paramount and in this context, health insurance should be considered an essential good, said insurance experts. “I would ask the Minister of Finance to consider reducing the GST for health insurance from the current 18% to the lowest 5%. This decision will also make health policies more affordable and will increasingly encourage people to buy health coverage,” said Shanai Ghosh, executive director and CEO of Edelweiss General Insurance.

In addition, due to the uncertainty caused by the Covid-19 pandemic, health insurance has become a daily need to protect against uncertainties and more relevant than ever. “The government should consider a drastic reduction in the applicable GST on health insurance premiums which is currently charged at 18%. This will encourage people to purchase additional health insurance and supplemental plans to protect against medical crises and emergencies,” said Roopam Asthana, CEO and full-time director, Liberty General Insurance.

Covid has shaken people up and made them realize the importance of having health insurance, insurance experts have said. However, to bridge the gap between attainment and intention to take out health insurance, it would really help if the government considered increasing the tax deduction limit under Section 80D of the Income Tax Act. income for health policies. Given high medical costs, a higher tax refund will provide more disposable income for the growing middle class, encouraging them to buy much-needed health care policy, Ghosh said.

Currently, health protection is paramount and in this context, health insurance must be considered an essential good, say insurance managers.

“In the next Union budget, we are calling on the government to step up measures to increase insurance penetration in the country, because even today a large part of the country’s population remains underinsured. or uninsured,” Asthana said. According to the IRDAI Annual Report 2020-21, insurance penetration in India stands at 4.2% of GDP compared to a global average of 7.4%, and as of March 2021, insurance penetration non-life insurance in India was just 1 percent.

According to insurance regulator IRDAI, premiums collected from health insurance policies increased by 28.78% to Rs 54,235 crore in the nine-month period to December 2021 from Rs 42,113. crores of rupees during the same period last year. New India Assurance, the largest player in the segment, reported premium collection of Rs 12,050 crore during the 9 month period against Rs 8,212 crore last year, an increase of 46.73%. Insurers have also reported an increase in Covid claims over the past year. The average Covid claim stood at Rs 1.23 lakh per person and the average settlement at Rs 91,287 in September 2021.

According to insurance industry officials, hospitals continue to regularly change their rates. There is no body to regulate hospitals on tariff structure and classification. There is no uniformity in the hospital fee structure across the country. When Covid hit the country last year, patients were defrauded by some hospitals. However, the regulator does not allow insurance companies to increase premiums every year, although there is currently an inflation of around 10-15% in hospital costs.

However, insurance officials said the regulator currently lacks the infrastructure to regulate hospitals. “As health care is a state subject, it is going to be difficult for IRDAI to regulate hospitals,” an official said.

With hospitals across the country following a different fee structure, a senior IRDAI official had recently proposed that there be a separate regulator for the healthcare segment or that IRDAI be allowed to regulate hospitals.

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