Insurance Industry is at an Interesting Juncture

Thanks to several initiatives by the government, India is witnessing an impressive increase in insurance penetration. PM-JAY, the world's largest health insurance/assurance scheme fully financed by the government, is just one among them. The COVID-19 has been a tailwind to this trend, as the demand for health and life insurance has further gone up. The health insurance market in India is poised to grow rapidly driven by awareness and the emerging challenges in terms of an individual’s life, including health and financial security of the dependents.

According to a report by consultancy firm Redseer, the

healthcare insurance market size in India will hit $222 billion by FY26, clutching the growing middle class and the rising digital penetration. However the insurance industry faces its own challenges, including rising medical inflation. The medical inflation has triggered many insurance companies to increase the premium on health insurance products this year. This could adversely affect the adoption curve.

In the aftermath of this, the government has a decision to make, especially in the upcoming budget whether or not to oblige the request from health insurance providers to reduce the current 18 percent GST rate of health insurance products. This will help reduce the premium costs and make health insurance purchases more affordable for policy buyers. Additionally, increasing the limit to claim tax deductions under section 80D will further enhance health insurance affordability. This will also lead to more people opting for health insurance for their family and elderly parents.

It is no wonder health insurance providers are waiting eagerly to see the open pages of the union budget, like many other industries. The timing couldn’t be better to come up with a special issue dedicated to the banking and insurance industry.