India’s parliamentary committee has called for urgent action to modernise the insurance sector, aiming to enhance public insurer resilience and make coverage more affordable through GST reductions and digital transformation initiatives.
India’s parliamentary scrutiny of the insurance sector has sharpened around two themes: the need to strengthen public sector insurers and the push to make cover more affordable. According to a report published by SAG Infotech, the Parliamentary Committee on Public Undertakings has urged the Insurance Regulatory and Development Authority of India to speed up the Risk-Based Capital framework, a prudential system that aligns capital requirements more closely with the risks insurers take on.
The committee’s concern is that public sector insurers are losing ground in a market where penetration remains below the global average. It wants the Department of Financial Services and IRDAI to set annual targets for life and non-life insurance penetration, while each public sector insurer develops a clearer market positioning strategy. The aim is to improve financial resilience, tighten risk management and strengthen protection for policyholders.
Tax treatment is another pressure point. The panel said the 18% goods and services tax on insurance products has weighed on affordability and discouraged uptake. It has called for an urgent review of GST rationalisation for health, term life, agricultural insurance and reinsurance, balancing the government’s “insurance for all by 2047” goal against fiscal constraints. Other parliamentary reporting has echoed that view, with recommendations for lower GST on health insurance for senior citizens and on microinsurance, as well as broader cuts for health and term cover.
The committee also flagged weakness in the finances of three public sector general insurers and asked for board-approved solvency restoration plans with quarterly milestones, reserving fresh capital support as a last resort after internal reforms. Beyond balance-sheet repair, it wants measurable digital benchmarks for central public sector insurers and wider use of claims automation, artificial intelligence, machine learning, fraud analytics and customer self-service tools, including integration with Bima Sugam. These steps, it said, would help modernise operations and improve service quality.
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