By Kavita Mistry 
In a recent development, the center has ordered life and non-life insurance companies to ensure that the benefits which come with the goods and services tax (GST) exemption which was approved earlier this month, needs to be fully passed on to both existing and prospective policyholders.
Government Ordered Insurance Company To Pass On GST Benefits To Policyholders
On Monday, Financial services secretary M Nagaraju directed insurers to proactively undertake outreach campaigns to publicise the GST reforms.
He has highlighted his perspective regarding the positive impact in making insurance more affordable and accessible for the common man.
He has made this clear during a meeting with heads of insurance firms and representatives from the regulator, Insurance Regulatory and Development Authority of India, or IRDAI, and officials from Life Insurance Council & General Insurance Council.
With these measures, they are expected to make insurance more accessible and cost-effective.
This would also help in strengthening financial security and enhancing insurance penetration across the country, noted by the finance ministry in a statement.
As we know that the GST Council had approved the exemption of GST on all individual life and health insurance policies earlier this month.
The move will make insurance more affordable for the common man and increase the insurance coverage in the country, said the Finance minister Nirmala Sitharaman.
Unsatisfied Policyholders With High Premiums
The Investment analyst Sandip Sabharwal on Monday hit out at the insurance industry, calling it the “most consumer unfriendly” sector and accusing the regulator of being complicit, in another development.
Further writing, “The insurance industry is the most Consumer-Unfriendly and is duly supported by a friendly regulator,” on X post.
He has emphasized that the insurers were increasing premiums arbitrarily even after the government’s recent move to abolish GST on health and life insurance.
Adding, “There is no control on how premiums are calculated or increased. Claims are denied left, right and centre and now.”
Moving ahead Sabharwal said, “After crying for so long that GST should be reduced, when the Government has eliminated GST on Life and Health insurance they are quietly increasing premiums quoting loss of ITC benefits. @FinMinIndia @PMOIndia you need to evaluate the working of #IRDA.”
This post triggered a flood of responses from analysts and policyholders.
The regulator’s approach compared poorly with SEBI, said the Research analyst Sameer Mekde.
Further adding, “Absolutely agree. I recently had a conversation with a friend who is a CS, where we debated SEBI vs IRDA. If IRDA were to adopt some of SEBI’s practices, many insurance companies could find themselves in trouble.”
According to another user, Chintan Mewar, the insurers were gaming the GST abolition, saying
“True earlier quote for my mom’s September renewal was low once the GST was announced they increased the earlier quote substantially now giving GST abolition discount… Very unprofessional and Fraud attitude.”
“I agree. Indian Health Insurance sector is a scam. Premium increase is non transparent and can be increased by any quantum. Many people discontinue after few years owing to steep hike in premium,” said one policyholder.
This was strongly supported by Aaditya, who is building multibagg.ai, echoing the view, “Exactly! Removing GST was meant to benefit policyholders, not give insurers a fresh excuse to hike premiums.”
The Internet is filled with these backlashs as it comes just weeks after the GST Council exempted individual health insurance from the Goods and Services Tax.
In this move, which was effective September 22, slashes the tax rate from 18% to nil.
Interestingly, many fear insurers may not pass on the benefits and instead raise base premiums.