Since the reduction in the GST rate from 18% to zero on health and life insurance services was done on September 22 last year, there were expectations that their premiums would decrease. Instead, premiums for health insurance increased relative to the previous year.

A family of four members paying ₹40,000 for a health insurance cover of ₹10 lakh before September 2025 will be paying more than ₹45,000 in 2026.

The rise in premium costs is not specific to one health insurance company. Health insurance providers are now charging higher premiums after reducing the GST rate.

According to health insurance providers, medical inflation has gone up by 15% since last year. Before the GST cut, companies used to get input tax credit back, which has been discontinued.

Companies also say that the increasing number of claims and the aging population are increasing their costs, making health insurance more expensive. Meanwhile, one in three health insurance policies face some form of payment problem. They are either rejected or not fully paid.

Causes such as concealing pre-existing medical conditions and filing claims immediately after purchasing the insurance (where claims are received after a certain period of time) are cited as reasons for claim rejection.

Meanwhile, sources at the Insurance and Development Authority of India (IRDAI) say that to address this consumer problem, the Insurance Sugam digital marketplace will be launched this year.

Preparations for this have been underway for the past two to three years. This digital platform will begin with motor insurance, but health insurance will also be included within a few months.

Digital purchases will eliminate the need to pay agent commissions, reducing insurance costs. Currently, agent commissions are included in the premium paid annually and at the time of purchase.

IRDA is also regulating agent commissions, and information about agent commissions will be provided on premium bills.

IRDA's digital platform will feature a Public Insurance Registry (PIR), which will provide complete data on all companies and all customers, preventing unnecessary claim rejections.

IRDA will also monitor purchases and related claims in real time, ensuring real-time resolution of consumer issues.

Just last week, a notification allowing 100% foreign direct investment in the insurance sector was issued. It is expected that this decision will attract a large number of foreign companies to the Indian insurance market, and competition among companies will reduce insurance costs.