GST 2.0: Insurers cut payouts to distributors
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Mumbai: Insurers are cutting commissions to distributors, including platforms such as PB Fintech, after the government scrapped Goods and Services Tax (GST) on individual policies while withdrawing input tax credit (ITC). From October 1, companies such as Niva Bupa, Care Health and ICICI Lombard began treating commissions as GST-inclusive, effectively reducing payouts by 18%. A ₹1,000 commission is now worth ₹847, according to letters sent to distributors. The move hits intermediaries in retail space dealing with individual life and health insurance products. Health insurance where commissions account for 15-20% of the ₹40,000-50,000 crore retail health insurance market, implying a potential ₹1,800 crore annual loss. Insurers are passing on the entire GST benefit to policyholders but offsetting the ITC loss by cutting distributor payouts. Life insurers face a similar squeeze. The industry paid about ₹24,000 crore in GST in FY24, offset by...