Insurers confederation calls for tax reduction on health insurance
Insurers confederation calls for tax reduction on health insurance | Insurance Business Asia
Life & Health
Insurers confederation calls for tax reduction on health insurance
Group says the move will benefit consumers
Life & Health
By
Noel Sales Barcelona
The Confederation of General Insurance Agents’ Associations of India has appealed to the national government to reduce the Goods & Services Tax (GST) on individual health insurance policies to 5% from the existing 18% to encourage more people to avail of these insurance policies, to ensure social security.
According to a Business Standard report, while health insurance premiums have nearly doubled in the past half-decade, the virtual number of lives covered and the number of policies issued remained small. The association also pointed out the steady decline in renewal rates caused by frequent premium hikes and rising medical inflation.
“The average percentage of renewal of retail health insurance policies is at 65%-75%. From this, it is very much evident that most of the policyholders are not able to pay the premium due to frequent hikes in insurance premiums and very high rate of GST,” the group said in a letter sent to the Union Finance minister. The letter urged the minister to revise the current GST rate on individual health insurance policies.
According to the report, GST rates charged by India on insurance are the highest compared to tax rates imposed by other countries. It was said that senior citizens or the elderly need to spend an average of Rs 12,000-Rs 15,000 (around US$143.62-US$179.53) for health insurance coverage worth Rs 1 lakh (roughly $1,196.87). In another report, it has been said that out-of-pocket expenses for healthcare remained at 48.2%, which is too heavy for common people who are living on minimum wage.
“Portfolio of health insurance in the general insurance industry is very significant for the benefit of masses. But sadly, the renewal rate of the policies is alarmingly declining due to frequent premium hikes and medical inflation,” the confederation said.
However, there is skepticism that lowering the GST will increase the likelihood of ordinary people purchasing an insurance policy.
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