India's Insurance Brokers Call for Structural Changes to Increase Low-Income Access to Coverage

Insurance brokers in India are urging the government to pair tax reforms with structural changes that would make insurance coverage more accessible to low-income groups. The Insurance Brokers Association of India (IBAI) has recently proposed linking basic insurance coverage to government-backed financial programs, such as the Mudra Loan initiative and the Pradhan Mantri Awas Yojana (PMAY). This approach aims to provide affordable insurance to vulnerable communities, which currently lack coverage despite the recent Goods and Services Tax (GST) exemption on individual health insurance premiums. IBAI estimates that approximately 55 million Indians hold health insurance policies, leaving the majority of the population uninsured.

Key Takeaways:

• The Insurance Brokers Association of India (IBAI) is calling for structural changes to increase low-income access to insurance coverage, recommending linking basic insurance coverage to government-backed financial programs.
• IBAI suggested that about 1% of a borrower's loan could automatically be directed toward an insurance premium that would protect against health, life, personal accident, business interruption, and property risks tied to the financed asset.
• Individuals with limited means seldom purchase insurance voluntarily, even though they are often most affected by medical or financial emergencies.
• IBAI proposed that instead of direct subsidies, the government could recognize premium payments for vulnerable groups as eligible Corporate Social Responsibility (CSR) spending.
• The association estimates that roughly 55 million Indians currently hold health insurance policies, leaving the majority of the population without any form of coverage.
• IBAI is ready to work with the Ministry of Finance and the Insurance Regulatory and Development Authority of India (IRDAI) to promote wider access to affordable insurance.
• The recent Goods and Services Tax (GST) exemption on individual health insurance premiums is a welcome move, but not a comprehensive solution to address the uninsured population.
• IBAI president Narendra Bharindwal emphasized the need for a soft mandate to ensure insurance reaches low-income groups, as they will not buy insurance voluntarily.

Statistics:

• Approximately 55 million Indians hold health insurance policies (source: IBAI).
• Roughly 1% of a borrower's loan could be directed toward an insurance premium (source: IBAI).
• The GST exemption on individual health insurance premiums is expected to make premiums more affordable (source: The New Indian Express).
• The majority of India's population is uninsured (source: IBAI estimates).

Sources:

• The New Indian Express
• The Insurance Brokers Association of India (IBAI)
• Ministry of Finance
• Insurance Regulatory and Development Authority of India (IRDAI)