The Insurance Regulatory and Development Authority of India (IRDAI) has reported a strong surge in demand for life and retail health insurance following the recent GST rationalisation on insurance premiums. The regulator expects this momentum to significantly accelerate in the second half of the financial year (H2FY26).
Speaking on Friday, IRDAI Member (Non-Life) highlighted that the GST reduction from 18% to zero on individual life and health insurance premiums has triggered "substantial growth and substantial interest" among consumers. However, the removal of ITC accompanied the GST cut.
October Data Shows What's Coming: IRDAI
The official noted that the spike in October is a strong indicator of the future trend. "Both the life insurance industry and retail health have seen substantial growth. As we move into the rest of the year, we know insurance demand naturally rises in H2. With this tailwind, penetration should improve significantly," he said.
IRDAI believes this positive momentum will help the sector reach a wider population, aligned with the government's long-term vision of 'Insurance for All by 2047'.
Roadmap for 2030: On-Demand, Parametric, and Faster Sandbox Approvals
To accelerate innovation, IRDAI is considering fast-tracking approvals under the regulatory sandbox framework and encouraging new-age insurance models such as:
- On-demand insurance
- Parametric insurance
- Tech-led micro policies
These initiatives are part of the industry's roadmap to expand access and deepen insurance penetration by 2030.
Distribution Needs a Rethink: Focus on Mis-Selling and Costs
The IRDAI member emphasised that distribution remains the biggest challenge, especially in remote and underserved regions.
Key concerns highlighted:
- Strictly avoiding mis-selling, which leads to mistrust
- Reducing distribution and management costs to sustainable levels
- Building fast, innovation-led distribution channels
"Manufacturing products will happen, but distribution is the key," he said, urging insurers to modernise delivery channels while strengthening compliance and transparency.
Trust Deficit: Grievance Redressal Must Improve
Customer grievances were flagged as one of the biggest barriers to trust. "Every grievance is a dent in trust," he noted, stressing the need for:
- Quick and fair complaint resolution
- Technology-driven monitoring
- Empathetic handling of customer disputes
He added that insurers must treat every grievance as an opportunity to build loyalty, not just settle disputes.
Insurance Penetration Not Just About GDP Share
While addressing India's low insurance penetration, the official said that true progress lies not in premium-to-GDP ratios but in providing affordable protection to citizens.
"The real measure of progress in 2030 or 2047 will be how safely and confidently our citizens can pursue their dreams," he said, underscoring the need for accessible, low-cost insurance solutions.
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