Page 13 - The Insurance Times January 2022

benefits. Many early-stage entrepre- Omicron may surge in Jan- Covid fuels 29% jump in
neurs leave their corporate jobs along
with its existing health insurance ben- Feb, mild cases likely health premium income
efits to take a risk and startup. Plum India could see a major surge in Omi- for insurers
wants to have them covered and en- cron cases during January-February as Covid pandemic has proved to be a
courage them to focus only on their the variant is expected to outpace the boon for insurance companies. With
disruptive growth journey," Plum said speed at which the Delta strain spread,
in a release. a senior official source told. He said the people increasingly taking health cover
infections, however, are likely to re- to meet medical expenses, general in-
No GST on top-up cover main mild. surance companies have reported a
29.81 per cent rise in premium income
cost employees pay: AAR The spike, predicted after conducting from the health segment to Rs 42,571
modelling studies, should be no cause
The Maharashtra bench of the GST for panic as the infectious disease ap- crore during the seven-month period
Authority for Advance Rulings (AAR) pears to be approaching a stage of ended October 2021.
has held that recovery of an amount endemicity in which transmissibility will This is almost double the growth of
towards top-up of medical insurance remain high, but the virus will not 14.3 per cent at Rs 32,796 crore wit-
and parental insurance premium from cause severe disease, he said. nessed in the same period of last year,
employees is not a supply and hence when people spent most of the time
not subject to goods and services tax New strain infects 70 times indoors under a nationwide lockdown.
(GST). Health premium income shot up by a
faster, but is less severe
The AAR held that Tata Power, which The omicron variant replicates around record 34 per cent to Rs 5,463 crore
had sought this ruling, is not rendering in the month of October alone, accord-
70 times faster than delta and the
any service of health insurance to its ing to figures released by insurance
original Covid-19 strain, though the
employees or their parents and there regulator IRDAI.
infection severity is likely to be much
is no supply of insurance services. lower, according to a University of Industry sources say that demand from
Hence, the issue of levy of GST does the retail segment is rising at a faster
Hong Kong study that adds weight to
not arise. However, it should be noted the early on-ground observations from pace as demand for individual health
that the company had not availed of South African doctors. policies is rising rapidly. The premium
input tax credit for the GST charged by growth of standalone health insurers
The supercharged speed of omicron's
the insurance company. In this case, continues to be higher than industry
spread in the human bronchus was
the AAR bench relied on a similar rul- average, indicating that retail premi-
ing given in 2018 in the case of Posco found 24 hours following infection, ac- ums are growing faster than the group
cording to a statement from the uni-
India Pune Processing Center. business as the standalone health in-
versity. The study, conducted by a
Lately, several AAR benches have team of researchers led by Michael surers derive most of their premiums
adopted a similar stand that GST can- Chan Chi-wai, found that the newest from the retail segment. Standalone
not be levied in cases of recovery of variant of concern replicated less effi- health players reported a 37.85 per
sums from employees for a wide range ciently -- more than 10 times lower -- cent rise in premium income at Rs
of services, such as a nominal amount in the human lung tissue than the origi- 10,500 crore during the 7-month pe-
recovered for canteen services or even nal strain which may signal "lower se- riod.
parking. As reported by TOI earlier, verity of disease." The rapid rise in health policies is be-
the Gujarat bench of the AAR had held The study, which suggests that omicron ing led by public sector New India As-
in the case of Tata Motors that GST jumps faster from one person to an- surance which reported a 53.23 per
would not be levied on the nominal other but doesn't damage lung tissues cent rise in premium income to Rs
amount recovered from employees for as much as its predecessor strains did, 9,176 crore in seven months as against
canteen facilities, which is passed on by is currently under peer review for pub- Rs 5,988 crore a year ago. The com-
the company to the third-party ca- lication in a scientific journal. pany reported a 135 per cent jump in
terer. However, it had also added that Bloomberg didn't have access to the premium income to Rs 1,327 crore in
input tax credit would be blocked. entire study. October alone, according to IRDAI. T

The Insurance Times, January 2022 13