
The Standing Committee on Finance, chaired by Jayant Sinha, has advocated for a reduction in the GST rate on insurance products, particularly health and term insurance, which currently stands at 18 percent. According to the committee’s report presented in Parliament, the high GST rate imposes a significant premium burden, discouraging individuals from obtaining insurance policies.
To enhance affordability in the insurance sector, the Committee proposed a reduction in GST rates for health insurance products, specifically retail policies for senior citizens and microinsurance policies, along with term policies. This measure aims to make insurance more accessible to a wider population.
Despite the recent dynamic growth of the insurance industry in India, driven by governmental reforms, the penetration and density of insurance products remain relatively low compared to advanced economies. In 2020, India accounted for only around 2 percent of the global insurance market, highlighting the sector’s potential for further development.
According to Swiss Re data, India held the tenth position in the global insurance business in 2021, with a market share of 1.85 percent, up from 1.78 percent in 2020. While total insurance premiums in India experienced a significant increase of 13.46 percent in 2021, the country still has considerable ground to cover compared to global trends.
In both the life and non-life insurance sectors, India’s rankings on the global scale are ninth and fourteenth, respectively, indicating room for growth and improvement. Insurance penetration and density serve as key indicators of the insurance sector’s maturity and development within a country.
Recognizing the importance of expanding insurance coverage beyond life insurance, the Committee stressed the urgent need to promote diverse insurance products to the masses. It proposed launching an awareness campaign, jointly conducted by insurance companies and IRDAI, highlighting the benefits of various insurance products, especially during critical times such as the COVID pandemic, floods, and cyclones.
The campaign, endorsed by reputable celebrities, aims to educate the public about the importance of insurance for safeguarding their families’ well-being. By featuring endorsements from celebrities who have personally invested in insurance products, such as motor, home, and health insurance, the campaign seeks to encourage broader adoption of insurance for enhanced security and protection.