The Indian insurance industry came under sharp criticism on Monday after an investment analyst publicly labelled it the "most consumer-unfriendly" sector and accused the regulator of complicity in the practice. In a post on X, he alleged that insurers were arbitrarily increasing premiums even after the government abolished the 18% GST on health and life insurance premiums.
"The insurance industry is the most consumer-unfriendly and is duly supported by a friendly regulator," he wrote, tagging the Finance Ministry and the Prime Minister's Office. He further alleged that claims are "denied left, right and centre" and that insurers were using the GST exemption as an excuse to hike base premiums by citing loss of input tax credit (ITC).
The comments triggered a wave of responses from policyholders and analysts, many of whom echoed similar concerns.
Complaints Pour In Against Insurers
A research analyst compared the Insurance Regulatory and Development Authority of India (IRDAI) unfavourably with the Securities and Exchange Board of India (SEBI). "If IRDA adopted some of SEBI's practices, many insurance companies could find themselves in trouble," he said.
Another user alleged that insurers were "gaming the system" by inflating renewal quotes. "True, earlier quote for my mom's September renewal was low. Once GST was abolished, they increased the earlier quote substantially and now give a GST abolition discount. Very unprofessional and fraudulent attitude," he wrote.
Several policyholders also shared personal experiences of steep annual hikes. One described Indian health insurance as a "scam," highlighting how non-transparent increases force many people to discontinue policies after just a few years.
A policyholder cited changes by a state-owned insurer: "Got a call from National Insurance about my medical insurance renewal. Earlier, premium revision used to happen once in five years, now it will happen every year with a hike of 15-18% annually."
Consumer Expectations vs Reality
The backlash comes only weeks after the GST Council exempted individual health insurance and life insurance from GST, effective September 22, 2025. The reform was intended to ease the financial burden on households, but many fear insurers will offset the benefit by hiking premiums, leaving policyholders worse off.
"Exactly! Removing GST was meant to benefit policyholders, not give insurers a fresh excuse to hike premiums," one analyst noted.
Calls for Regulatory Action
The debate has once again put the spotlight on the insurance regulator. Critics argue that IRDAI must take stronger steps to ensure transparency in premium calculations, consumer protection in claim settlements, and accountability in policy renewals. With rising discontent among policyholders, analysts warn that failure to act could undermine trust in the insurance sector just as the government is attempting to make it more affordable and accessible.
CAclubindia
