January 24, 2022 3:02:34 am
With Covid pandemic still playing havoc in the country, the insurance sector is pushing for a reduction in the GST on health policies to bring more people under the insurance umbrella.
Overtaking the motor segment, the health sector has already become the fastest growing segment in the insurance sector after the pandemic hit the country in March 2020 and medical costs surged.
Currently, protecting health is paramount and in this context, a health insurance should be viewed as an essential commodity, insurance experts said. “I would request the Finance Minister to consider the reduction of GST for health insurance from the current 18 per cent to the lowest slab of 5 per cent. This move will also make health policies more affordable and push more and more people to buy a health cover,” said Shanai Ghosh, Executive Director & CEO, Edelweiss General Insurance.
Further, due to the uncertainty spurred by the Covid-19 pandemic, health insurance has become an everyday need in order to protect oneself from uncertainties and more relevant than ever. “The government should consider a drastic reduction in the GST applicable on health insurance premiums which is currently charged at 18 per cent. This will encourage people to purchase health insurance and additional top-up plans to protect themselves from medical crises and emergencies,” said Roopam Asthana, CEO & Whole-Time Director, Liberty General Insurance.
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Covid has shaken people and made them realise the importance of having a health insurance, insurance experts said. However, to close down on the gap between realisation and intention to actually buying health insurance, it would really help if the government could consider increasing the tax deduction limit under section 80D of the Income Tax Act for health policies. Given the high medical costs, a higher tax rebate will ensure more disposable income with the growing middle class, thereby encouraging them to buy the much-needed health policy, Ghosh said.
Currently, protecting health is paramount and in this context, a health insurance should be viewed as an essential commodity, insurance officials say.
“In the upcoming union budget, we request the government to intensify steps towards increasing insurance penetration in the country, since even today a large part of the population in the country still remains underinsured or uninsured,” Asthana said. As per IRDAI’s Annual Report-2020-21, insurance penetration in India stands at 4.2 per cent of the GDP as against the global average of 7.4 per cent, and as of March, 2021 the non-life insurance penetration in India stood at barely 1 per cent.
According to insurance regulator IRDAI, premium collected under health insurance policies rose 28.78 per cent to Rs 54,235 crore during the nine-month period December 2021 as against Rs 42,113 crore in the same period of last year. New India Assurance, the largest player in the segment, reported a premium collection of Rs 12,050 crore in the 9-month period as against Rs 8,212 crore last year, a rise of 46.73 per cent. Insurers have also reported a jump in Covid claims in the last one year. The average Covid claim worked out to Rs 1.23 lakh per person, and the average settlement to Rs 91,287 as of September 2021.
According to insurance sector officials, hospitals keep on changing tariffs on a regular basis. There is no body to regulate the hospitals on the tariff structure and grading. There’s no uniformity in tariff structure in hospitals across the country. When Covid hit the country last year, patients were fleeced by some hospitals. However, the regulator does not allow insurance companies to raise premium every year though there is around 10-15 per cent inflation of hospital charges at present.
However, insurance officials said the regulator currently doesn’t have the infrastructure to regulate the hospitals. “As healthcare is a state subject, it’s going to be a tough proposition for IRDAI to regulate the hospitals,” said an official.
With hospitals across the country following different tariff structure, a top IRDAI official had recently proposed that either there must be a separate regulator for the healthcare segment or that the IRDAI must be allowed to regulate hospitals.
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