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Informist, Thursday, Oct. 30, 2025

 

MUMBAI – Exempting individual term insurance products from Goods and Services Tax is an inflection point for the insurance industry but more needs to be done to improve penetration, life insurance company executives said Thursday. "This will help the insurance sector to grow, insurance will become affordable. GST waiver alone will not help increase insurance penetration as such. It will surely facilitate, but it itself is not sufficient to increase penetration in India," Life Insurance Corp. of India Managing Director Ratnakar Patnaik said at Business Standard's BFSI Insight Summit.

 

On Sept. 3, the GST Council slashed rates on term life and health insurance premium paid by individuals to nil from 18%. The change came into effect from Sept. 22.

 

Patnaik said insurers need to address the insurance protection gap to start with and spreading awareness is very essential for that purpose.

 

Bajaj Life Insurance Ltd. Managing Director Tarun Chugh said the GST exemption will surely help, "but insurance is not a product which people will stand up tomorrow and buy. So assuming that people will be flocking to branches and start buying more is not necessarily what is going to happen." Though there was a sudden spike in demand for insurance in September after the change in GST rates came into effect, insurers will have to keep it alive in the minds of the customers, he said.

 

Another life insurer said the cut in GST rate clearly sends out a message that insurance is one of the essential aspects of life. "We can use this opportunity to seize the moment and we can make term insurance as the feeder product that all of us acquire customers on the backdrop of term insurance and then see whether we can cross-sell and up-sell," Kotak Mahindra Life Insurance Co. Managing Director Mahesh Balasubramanian said.

 

Insurers also batted for bringing down distribution cost to improve penetration. "(Also) do product innovation which are suited for the Indian consumers," ICICI Prudential Life Insurance Co. Ltd. Managing Director and Chief Executive Officer Anup Bagchi said.

 

He said customers look for four things in insurance products -- small premium, large insurance cover, instant issuance, and instant claim settlement.  End

 

Reported by Sagar Sen and Krity Ambey

Edited by Ashish Shirke

 

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