Life and health insurers expect 2026 to mark a return to stronger growth, buoyed by the GST rate cut and the passage of the Insurance Amendment Bill. According to industry players, the two developments could address both demand- and supply-side constraints.
“Over the last quarter, GST relief has been a key driver in reshaping demand patterns for life insurance by making it more affordable,” said Alok Rungta, MD & CEO of Generali Central Life Insurance. He added that while price-sensitive protection products such as term insurance have seen the most immediate benefit, the impact has extended beyond protection, with renewals also witnessing a noticeable uptick. “Looking ahead, this trend is likely to accelerate penetration and lead to more integrated offerings that address long-term financial needs.”
Life insurance Industry
The life insurance industry’s new business premium jumped 23% year-on-year in November, the highest in the current fiscal, to ₹31,119.64 crore. The surge followed the GST exemption on all individual life insurance premiums, including term plans, ULIPs and endowment products, effective September 22, 2025, from the earlier 18% rate.
Tarun Chugh, MD & CEO of Bajaj Life Insurance, said the GST cut has renewed the focus on pure protection, particularly term insurance, where affordability directly influences conversion. “Removing GST makes term insurance meaningfully cheaper for first-time and price-sensitive buyers.” According to him, for a 35-year-old buying cover up to age 75, the GST exemption has delivered savings equivalent to nearly seven annual premiums, which is an immediate, tangible benefit. “While protection should see the sharpest uplift, savings and annuity products also become more efficient, which can support a healthier mix over time.”
What did Subhrajit Mukhopadhyay say?
Subhrajit Mukhopadhyay, deputy CEO and ED of Edelweiss Life Insurance, pointed to the improving affordability following the GST cut, noting that it lowers entry barriers, especially for first-time buyers. Early trends, he said, are encouraging, with the industry already seeing a positive growth response after the tax removal.
Life insurers reported an 8% growth in cumulative new business premium between April and October at ₹2.37 lakh crore before the GST benefits took effect.
Parag Raja, MD & CEO of Bharti AXA Life Insurance, said while GST rationalisation is a clear demand enabler, the Sabka Bima, Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 — which allows 100% foreign direct investment in insurance — addresses structural supply-side constraints.
According to him, the Bill allows insurers to move beyond short-term solvency management and invest in customer-facing capabilities, including deeper distribution in underserved markets, technology and data ecosystems for instant underwriting, and modular product innovation aligned to different income levels and life stages.
“Put together, the GST rationalisation and the Insurance Amendment Bill clear two historic bottlenecks – demand and supply,” Raja said.
Non-life insurers also expect premium collections to remain robust in 2026, led by health insurance following the GST cut. Rakesh Jain, CEO of IndusInd General Insurance, said the general insurance industry posted a steady growth in 2025, with gross premiums reaching ₹3.08 lakh crore, up 6.2%. However, penetration remains around 1%, well below the global average of 4%, underscoring a significant headroom for expansion.
“2026 promises an accelerated growth of 8–13%, fuelled by increasing insurance awareness, deeper penetration into underserved markets, and sustained demand for health and commercial lines,” Jain said.
Health insurance currently accounts for about 40% of non-life premiums. Naveen Chandra Jha, MD & CEO of SBI General Insurance, said 2026 could also see growth in non-traditional segments. “Climate risk in India is emerging as a significant financial and public health challenge. We are seeing growing demand for coverage beyond traditional health and motor insurance, including cyber risk, fire insurance and emerging business lines, reflecting a more complex and interconnected risk environment.”
Jha said allowing 100% FDI would help build a well-capitalised and globally competitive insurance ecosystem by attracting long-term capital, enabling access to global expertise, and accelerating innovation across technology, risk management and product design.