Government Must Look Beyond GST to Deepen Insurance Penetration: IBA-I

Government Must Look Beyond GST to Deepen Insurance Penetration: IBA-I

The Insurance Brokers Association of India (IBA-I) has urged the government to implement additional reforms beyond the recent GST rate rationalization to truly expand and deepen insurance penetration across the country.

IBA-I’s Core Argument

• Limited Impact of GST Cuts: While the removal of GST on individual health and life insurance premiums improves affordability, the industry body contends that tax cuts alone are not enough to fundamentally change India’s low insurance penetration rates.
• Need for Tax Incentives: IBA-I is pressing the government to introduce comprehensive and long-term tax incentives for consumers who purchase insurance policies. They argue that these incentives are a far more effective tool for stimulating demand and encouraging behavioral change than mere price reductions resulting from GST cuts.
• Focus on Distribution Channels: The association also emphasized the need for reforms to strengthen the distribution ecosystem, particularly in rural and semi-urban areas. Any tax changes should not inadvertently harm the viability of agents and distributors, which are crucial for reaching uninsured populations.
• Broader Policy Review: The overall message is a call for a holistic review of insurance policies and regulations to align the sector with the national goal of achieving “insurance for all” by making products attractive, affordable, and accessible.