Insurance: Insurance companies have expressed concern that they are finding it difficult to absorb the increased costs resulting from the GST adjustment without increasing premiums. Following this, relief measures have been considered.
Insurance policyholders may soon receive some relief. Sources indicate that following discussions between insurance companies and the government, hospitals may keep their treatment rates stable through 2026. This move could bring relief to policyholders. Stable treatment rates will reduce the likelihood of increased premiums for policyholders, while the absence of increased expenses will allow policyholders to maximize their policy limits. This decision is also significant because insurance companies are facing increased costs due to recent GST changes.
Sources said the Department of Financial Services (DFS) intervened and arranged meetings between hospitals and insurance companies to discuss the possibility of not increasing treatment rates for the next year. These discussions reportedly began after insurance companies expressed concerns that they were finding it difficult to absorb the increased costs due to the GST adjustment without increasing premiums. While the reduction in GST rates benefits customers, overall operational costs are likely to increase due to insurance companies not being able to claim back input tax credits as before.
Medical inflation in India is currently estimated at around 14%. Insurance companies typically increase premiums by 8–12% each year to address this inflationary pressure. However, the already rising costs due to the GST changes may make it difficult for companies to implement these increases, while also passing on the benefits of the 18% GST reduction to customers.
What will be the benefit?
If this proposal is finalized, the move to stabilize hospital rates will help control healthcare costs and limit potential premium increases next year. This will benefit policyholders.
