GST cut lifts life, retail health insurance growth: Irdai member Sood

Deepak Sood says zero GST on life and health insurance has sparked strong growth, with demand set to accelerate in H2FY26 as the industry pushes for deeper penetration and better distribution

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There is substantial growth and interest in life and retail health insurance post the Goods and Services Tax (GST) rate changes, Deepak Sood, member (non-life), Insurance Regulatory and Development Authority of India (Irdai), said on Friday, adding that growth is likely to further pick up in the second half of the financial year (H2FY26).

 

“What we have seen in October is an indication of how things will be. I think both the life insurance industry and retail health have seen substantial growth, substantial interest coming from people. As we get into the rest of the year, we all know that health insurance, life insurance, picks up towards the H2. With this tailwind, we should be able to make penetration much better, reaching out to people. It’s a great one, and I think we should use it to the best,” Sood said.

 

Recently, the GST on premiums for individual life and health insurance products was rationalised by the government to zero from 18 per cent earlier. However, along with it, input tax credit (ITC) was also withdrawn.

 

Irdai and the government’s vision is “insurance for all by 2047,” and the industry has charted a roadmap to achieve this, supported by steps taken by the insurance regulator. For 2030, Irdai is considering fast-tracking the sandbox framework and encouraging new models such as on-demand and parametric insurance.

 

Sood said that there is a serious need to rethink distribution, as it remains a key factor in reaching remote areas.

 

“Manufacturing products will take place, but distribution is the key. We will need to build faster and innovation-led distribution. But we have to focus on two areas in distribution. Number one is strictly avoid any kind of mis-selling, because I think that is something that leads to a trust deficit. Secondly, reducing the cost of distribution. It is important to bring down the cost of intimidation and management expenses to a sustainable level,” Sood said.

 

According to him, another key aspect affecting trust among customers is grievance handling by the industry. Every grievance is a dent on trust. So, developing a robust and highly responsive mechanism to ensure quick and fair resolution of grievances of policyholders is really the need of the hour.

 

“We must leverage all our resources at our disposal to develop proper monitoring and technology-led solutions in this direction. I think it is extremely, extremely important for any industry, let alone insurance, to handle grievances properly. In insurance, there cannot be anything more important. If there is a grievance, we need to handle it with empathy, we need to take this opportunity. Every grievance that we settle in favour of our consumer should lead to two things,” he said.

 

While speaking on low insurance penetration, he said that providing protection to policyholders against any eventuality at affordable cost has led to lower premiums, and that is the real insurance penetration.

 

“Because a true measure of our progress in 2030 or 2047 is not just going to be a percentage of GDP or premium. It will be how safely and confidently our citizens can pursue their dreams and can have those dreams which keep them awake.”