The Insurance Brokers Association of India (IBAI) has called on the Ministry of Finance to adopt additional policy measures beyond the recent GST exemptions to deepen health and life insurance coverage across India.
While the recent GST exemption on individual health insurance premiums announced during the 56th GST Council meeting has been welcomed by the sector, IBAI said that the move alone may not be sufficient to bring India's large vulnerable population under the insurance safety net.
"A large part of India's low-income and marginalised groups still remain uninsured. We need to think beyond tax reforms and ensure inclusion through soft mandates," said the IBAI President.
Proposal for Soft Mandates Linked to Financial Products
IBAI has suggested embedding suitable insurance covers into government-backed financial schemes such as Mudra Loans and Pradhan Mantri Awas Yojana (PMAY). The idea is to create an automatic insurance mechanism that protects small borrowers against health, life and property-related risks.
Under the proposed model, a 1% deduction from the borrower's loan amount could be channelled towards a comprehensive insurance premium. This would provide a 360-degree cover-including health, life, personal accident, benefit-based business interruption and property insurance especially for low-income borrowers who otherwise do not opt for such protection voluntarily.
"Insurance should be built into the system through soft mandates, not as an option. Once people see the benefits firsthand, they will begin to trust the system and participate voluntarily," the IBAI President added.
CSR Route for Expanding Coverage
To further widen insurance inclusion, IBAI has proposed that premium payments for vulnerable groups be recognised as an eligible Corporate Social Responsibility (CSR) activity. This would allow companies to deploy CSR funds toward providing insurance coverage, reducing the government's fiscal burden.
At present, only about 5.5 crore individuals in India are covered under health insurance policies, according to IBAI estimates a figure that highlights the urgent need for structural reforms in insurance penetration.
Industry Collaboration with Regulators
IBAI has also expressed willingness to collaborate with the Ministry of Finance, the Insurance Regulatory and Development Authority of India (IRDAI) and other stakeholders to provide data, research insights and coordination support for effective policy implementation.
The association's appeal follows the government's announcement of a full GST exemption on individual health insurance premiums, effective September 22, 2025, replacing the earlier 18% tax rate. The move is expected to make health insurance more affordable and accessible, but experts agree that broader initiatives are essential to achieve inclusive risk protection.
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