GST exemption to give big push for retail health insurance penetration: Medi Assist CEO

The GST exemption on individual and family floater insurance policies is expected to give a strong boost to retail insurance, with the industry seeing this as a step that will improve penetration and expand coverage.

“On the retail side, we are very excited, both as Medi Assist and also as the Association of TPAs, because it provides a significant and immediate boost to improving penetration and expanding coverage,” said Satish Gidugu, CEO of Medi Assist.

For Medi Assist itself, the change will not have a direct cost impact, since the company deals only with servicing and not with premiums or claim payouts. “Our yields are between 3% to 4% of the premiums, which is among the lowest globally compared to servicing overheads. So, we don’t see any impact on the servicing side from a premiums perspective,” Gidugu explained.

Group insurance policies, however, continue to attract 18% GST with no input tax credit. Gidugu said insurers are beginning to design hybrid products that combine group and retail features, which could open the way for more innovation in the group segment.

He added that the benefit to policyholders may not be the full 18% saving since insurers are expected to use some of the input tax credit. Still, the move is likely to ease affordability pressures, especially with medical inflation running at twice the rate of general inflation. “We absolutely expect this to be a beneficial move to bridge the coverage gap we see today,” Gidugu said.

He also pointed out that supply-side relief, such as lower GST on life-saving drugs, medical equipment and consumables, could help reduce healthcare costs if passed on by providers, creating an additional incentive for more people to buy retail insurance.

Watch accompanying video for entire conversation.