• UGI USER
  • Aug 07, 2024
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“RISING INSURANCE PREMIUMS SPARK GST REMOVAL DEBATE”

Why in the news?

Rising health insurance premiums and an 18% GST are making policies less affordable. Opposition leaders and experts demand the removal of GST, citing the strain on consumers and insurers.

"RISING INSURANCE PREMIUMS SPARK GST REMOVAL DEBATE" - UPSCsource:researchgate

About Rising Insurance Costs and GST Concerns:

  • Premium Hikes and GST Impact:
    • Insurance companies have increased premiums by up to 50-60% this year.
    • The 18% GST on health and life insurance premiums is contributing to the higher costs.
    • Medical inflation, at 14%, is also making insurance less affordable.
  • Opposition and Government Response:
    • Opposition leaders, including Rahul Gandhi and Mamata Banerjee, are demanding the removal of the 18% GST on insurance.
    • Nitin Gadkari has criticised the tax for restricting industry growth and increasing premiums.
    • The government has received calls for reducing or exempting GST from insurance premiums.
  • Market and Policy Considerations:
    • GST replaced previous service taxes, increasing insurance costs from 15% to 18%.
    • Insurance penetration in India is low, and high GST rates are seen as a deterrent.
    • Recommendations suggest lowering GST to make insurance more affordable and align with the “Insurance for All by 2047” goal.
About Insurance Regulatory and Development Authority of India(IRDAI) Vision 2047: Insurance for All

Objective:

  • Ensure comprehensive life, health, and property insurance for every citizen by 2047.
  • Support enterprises with appropriate insurance solutions.
  • Enhance global attractiveness of the Indian insurance sector.

Focus Areas:

  • Match products to customer needs.
  • Strengthen grievance redressal mechanisms.
  • Improve business facilitation and regulatory alignment.
  • Foster innovation and competition.
  • Promote technology integration and efficiency.

Significance:

  • Provides affordable coverage and faster claim settlements.
  • Includes additional benefits like gym memberships.