The life insurance industry reported a 15% year-on-year rise in new business premiums to Rs 40,206.67 crore in September, supported by robust growth from both the Life Insurance Corporation of India (LIC) and private insurers.
The rebound follows a 5% decline in August, when collections dropped to Rs 30,958.77 crore as customers delayed purchases in anticipation of GST rate cuts on life insurance.
LIC’s premium income grew 12% year-on-year to Rs 22,957.09 crore, led by a sharp 35% increase in group insurance premiums to Rs 17,878.94 crore. However, individual new business premiums fell 28% to Rs 5,078.17 crore, while the number of policies sold declined 42% to 13.6 lakh during the month. Private life insurers — comprising 26 companies — reported an 18% growth in new business premiums to Rs 17,249.58 crore in September. Among major players, SBI Life recorded a 32% surge to Rs 3,953.22 crore, HDFC Life grew 10% to Rs 2,942.3 crore, and ICICI Prudential Life saw a 6% increase to Rs 1,761.28 crore.
Despite the premium growth, private insurers saw a 2% dip in the number of policies sold, totaling 8.48 lakh in September. Analysts expect the second quarter to be muted for life insurers, citing the impact of GST exemption and the consequent loss of input tax credit (ITC) on distribution and commission expenses.
“While dynamics between stakeholders are evolving, Q2 was weak for life companies in terms of growth and margins, reflecting ITC losses and product mix changes,” analysts at Kotak Institutional Equities said.
They expect the value of new business (VNB) for Q2FY26 to range between (-)5% and +13%, driven by rising bond yields, higher share of term plans post-GST exemption, and ITC losses on business sourced after September 22, when the zero GST rate took effect.
Analysts at JM Financial estimate annualised premium equivalent (APE) growth of around 15% for Axis Max Life and HDFC Life, 13% for SBI Life, and 9% for LIC, while ICICI Prudential’s APE is expected to remain flat. On the margin front, they noted that the quarter was operationally strong, aided by lower deposit rates and rising G-sec yields. “However, ITC losses following the GST cut are expected to weigh on profitability. Margins are likely to remain flat year-on-year for HDFC Life, while LIC, ICICI Prudential, and SBI Life could see about a one percentage point improvement,” they added.