“The GST cut on health insurance has been a meaningful step towards improving affordability and driving wider adoption. On a year-on-year basis, policy issuances have increased by 20 percent and premiums by almost 10 percent,” Rakesh Kaul, Chief Distribution Officer – Retail Business, Bajaj General Insurance (formerly Bajaj Allianz General Insurance Company) said. business line on Wednesday.
Policy support
The shift reflected how a supportive policy environment can strengthen insurance penetration and encourage more people to prioritize financial protection for their health, he added.
According to the MD & CEO of a major general insurance company, the average growth in sales (premium) of health policies across all insurers due to the VAT exemption was more than 20 percent, while the growth rate could vary from company to company, taking into account the normal growth of the segment.
Data from the Insurance Regulatory and Development Authority of India (IRDAI) also indicates the sharp increase in gross direct premiums (GDP) underwritten by non-life insurers. The growth rate was higher: 38 percent for independent health insurers.
The spike in healthcare premiums had actually contributed to the overall premium growth in October, which would have been lower at ₹29,604 crore, against ₹29,593 crore in the same month last year. It would have become almost negative without the increase in VAT for health insurers.
“The first full month of implementation, October, has seen strong growth. Industry data shows that health insurance premium collections grew due to renewed retail demand as households opted for higher coverage and new enrollments spiked during festive renewals,” said Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI).
The brokers and advisors witnessed a renewed wave of interest from the retail industry, especially among the middle-income and senior segments, he said, adding: “However, as insurers can no longer claim the Input Tax Credit (ITC), some are recalibrating commission structures – this area needs monitoring to maintain balance in the distribution value chain.”
While premiums in the healthcare segment soared, premiums for new life insurance policies showed a mild adjustment in the short term due to a temporary recalibration by insurers and agents. According to experts, this is expected to normalize as the industry adapts to revised pricing and billing systems under the GST-free regime.
Published on November 12, 2025
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