Health

Insurers gearing up to pass 18% GST waiver benefit to customers

AnyFans 2025-09-18

By G Naga Sridhar

Buying individual life and health cover will be cheaper as insurance companies are set to implement the waiver of 18 per cent Goods and Services Tax (GST) on premiums from Sept 22. Half a dozen insurers confirmed to businessline that they will pass on the benefit of GST reduction to policyholders.

“Customers now only need to pay the net premium amount. To ensure maximum awareness, we have already initiated communication activities on our social media platforms, ‘‘ said KV Dipu, Senior President, Operations & Customer Service, Bajaj Allianz General Insurance.

Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance, said the company has started communicating with customers and agents on the benefits that are in store. Bankim Mapara, Chief Financial Officer, Universal Sompo General Insurance, said customers will only be required to pay the base premium for their health insurance policies without any additional tax.

ManipalCigna Health Insurance will also reduce the premium as customers will have to pay zero GST on their health insurance premium, said Shashank Chaphekar, Chief Distribution Officer, ManipalCigna Health. The insurers, who will lose the present benefit of Input Tax Credit in a zero GST regime, will have to take a hit while passing the full benefit of GST reduction. The insurers cannot claim ITC on GST they pay on expenses, including commissions, rent and software.

Zurich Kotak General Insurance is implementing the tax reform by reworking its actuarial and economic models to ensure that the entire benefit is passed on to customers, according to Alok Agarwal, MD and CEO, Zurich Kotak General Insurance.

GROUP COVER

Sandeep Dadia, CEO & Country Head, Lockton India, said as the GST reduction applies only to individual health and life premiums, the corporate clients providing group health or life cover to employees are unlikely to see a direct reduction in premiums.

The impact is more indirect through employee top-ups or company schemes that include individual policies, he added. For instance, employees opting for individual top-up health or life policies outside their group cover will benefit from the reduced GST, improving affordability and satisfaction. Similarly, in flexible benefit plans, corporations that subsidise or reimburse employees for individual health or life policies may see a marginal reduction in reimbursements.

The implementation of GST reduction needs to ensure better coordination among all stakeholders. “The immediate task before companies is to reconfigure IT and accounting systems, update product pricing and align premium collection processes,’‘ said Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI). “The brokers are now focusing on educating clients, clarifying premium break-ups and helping individuals navigate the changes in their retail policies, said the IBAI President.

Published on September 18, 2025