Insurance brokers body raise issue of GST burden transfer by general insurers

The Insurance Brokers Association of India (IBAI) has urged the General Insurance Council for an industry dialogue on transfer of Goods and Services Tax (GST) burden to intermediaries.

It also “raised concerns over market conduct, urging the Council to advise insurers to honour existing commission arrangements, avoid discouraging the servicing of retail health policies and consult intermediaries before altering remuneration terms.” IBAI said this after its leadership submitted a representation to GI Council Chairman Tapan Singhel on Monday (October 13, 2025).

The Association, representing 750 licensed insurance brokers across the country, said it has highlighted, in the representation, “critical issues affecting transparency, market conduct and policyholder welfare in the general insurance sector.” The development comes in the backdrop of insurers reportedly reducing commission they pay to the intermediaries, in the wake of removal of GST on individual life and health policies, as a measure to offset the consequential loss of Input Tax Credit (ITC).

An industry-wide dialogue on the transfer of GST burden to intermediaries is required to maintain viability and compliance, along with standardised and time-bound co-insurance brokerage settlement guidelines to streamline operations and cashflows, IBAI said in a statement. The Association also reiterated its commitment to work with the GI Council, government and regulators to strengthen customer trust, improve distribution efficiency and ensure sustainable market growth.

Key recommendations in its representation include those aimed at building a more transparent and equitable insurance ecosystem, inclusion of IBAI nominee as a special invitee in GI Council meetings discussing distribution and policyholder issues, adoption of a standard and fair arbitration clause across all policy types and formation of a joint working group to operationalise an alternative dispute resolution framework.

To enhance transparency and consumer protection, IBAI is proposing quarterly product-level disclosure of claim settlement ratios, loss ratios and turnaround times on insurer websites. It has also recommended appointing a grievance redressal officer for commercial claims within each insurer and urged senior leadership to expedite long-pending and high-ticket claim resolutions. “When all stakeholders work in harmony and decisions are made through open dialogue, it leads to better outcomes for customers and builds lasting trust in the system,” IBAI president Narendra Kumar Bharindwal said.

Mr. Singhel emphasised importance of stronger coordination and constructive dialogue among all industry bodies and stakeholders.