MUMBAI: Insurers, who have changed their systems to pass on the benefits of the GST exemption to new customers (including those porting in to a new insurer) of life, health, personal accident and travel insurance policies, are expecting better affordability to drive their businesses at a faster clip.
The new GST rates kicked in from Monday after the rate rationalization announced last month when the GST Council did away with the 12% and 28% slabs, retaining the 5% and 18% slabs, with the third rate being the compensation cess on sin goods and luxury foods along with a 28% basic GST taking the applicable top rate to 40%, down from the previous 48%.
Naveen Chandra Jha, the managing director of SBI General Insurance, said his company has passed on the full benefit of the GST exemption to all new individual customers, making insurance more affordable.
“Accordingly, the net outgo for individual consumers has been reduced for products like health insurance, personal accident and travel insurance, maintaining the same policy coverage and claims servicing standards,” he told TNIE.
“The GST exemption applies to new policies, portability as well as migration cases enabling individual policyholders, including the first-time buyers, to benefit from lower insurance premium across these categories,” he added.
According to Tarun Chugh, the chief executive of Bajaj Allianz Life, the GST exemption on life insurance premium is a landmark move that will make protection more affordable and accelerate insurance penetration. "As an industry, we see this as a crucial step forward in strengthening financial security for millions," he said.
“We expect customers to welcome this reform positively, as lower premium directly addresses affordability--one of the key barriers to insurance adoption. Over time, this change has the potential to drive higher policy uptake, renewals and broader coverage,” he added.