In a report presented to Parliament on Tuesday, the Jayant Sinha-led committee expressed their belief that a high GST rate leads to a hefty premium burden, which discourages people from purchasing insurance plans.
In an effort to lower the cost of insurance, the Committee suggested lowering the GST rates that apply to health insurance products, specifically senior citizen retail plans, microinsurance policies (up to the current ₹5 lakh PMJAY limit), and term policies.
The penetration and density of Indian insurance products are still low, notwithstanding the insurance industry’s recent dynamic growth and the rise in total insurance premiums brought about by the present government’s reforms.
In comparison to the insurance sectors in developed nations, the Indian insurance sector, which will account for approximately 2% of the global insurance market in 2020, still has a long way to go.
India’s market share in the worldwide insurance business was 1.85% in 2021 (up from 1.78 percent in 2020), according to data from Swiss Re, placing it tenth overall.
In 2021, insurance prices went up by 13.46%.
In 2021, the aggregate insurance premiums in India climbed by 13.46 percent (7.8% real growth adjusted for inflation), while the worldwide total insurance premiums experienced a 9.04 percent (3.4 percent real growth adjusted for inflation) increase in the same period.
India is rated ninth in the world in 2021 for life insurance. India is rated fourteenth in the world for non-life insurance.
Among other indicators, insurance density and penetration are frequently used to gauge how developed an insurance market is in a given nation.
“The Committee is, therefore, of the view that there is an imminent need to create mass benefits from having necessary insurance protection for diverse insurance products, not just life insurance,” said the report.
The Committee suggested starting a campaign to inform customers about the advantages of various insurance plans, claims settled for COVID-19 cases nationwide, and insurance claims made during floods and storms.
“Life, health, and general insurance products should be included in this awareness campaign, which should be jointly promoted by insurance companies and IRDAI. Reputable and trustworthy celebrities can attest to the fact that they have purchased various insurance products, including health, home, and auto insurance, and they can advise the general public to do the same for the safety of their families,” the statement continued.
