Despite recent government measures, retail health insurance penetration in India remains below 4%, with affordability being a significant barrier: Mayank Bathwal, CEO, Aditya Birla Health Insurance
FinTech BizNews Service
Mumbai, September 13, 2024: In light of the recent discussions during the 54th GST Council meeting, Mayank Bathwal, CEO, Aditya Birla Health Insurance Co, has shared an important perspective on the potential impact of GST reductions on health insurance premiums:
"Despite recent government measures, retail health insurance penetration in India remains below 4%, with affordability being a significant barrier. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY), launched in 2018, was a step towards Universal Health Coverage (UHC). Any measure that makes insurance more affordable will help increase penetration, advancing us towards UHC.
GST is a considerable cost, and reducing it could significantly help. For example, an 18% GST on a Rs 50,000 premium increases the cost to Rs 59,000. Therefore, a reduction or concession in GST would make insurance more affordable, directly impacting premiums. If GST is reduced, premiums would decrease accordingly. Additionally, medical inflation is 4-5% higher than general inflation, requiring insurance companies to revise their premiums regularly. If premiums increase every 12-18 months, and an 18% GST is levied on top, the product becomes more expensive. As a result, consumers may opt for lower sums insured or stop renewing their policies.
Therefore, I believe the government should reduce the GST on health insurance premiums to 12%. Affordability is particularly an issue for senior citizens, whose premiums are inherently higher due to age and risk profile, and for the “missing middle” segment of the population. Reducing GST to 5% for these groups would greatly benefit the customers and the sector as a whole.”
