Shares of life insurance companies took a hit on Thursday amid concerns over margin pressure after the finance ministry formed a task force to draft new direct tax rules. Four listed insurance players \u2014 SBI Life Insurance, HDFC Standard Life Insurance, ICICI Prudential Life Insurance and Max Financial Services \u2014 witnessed a combined market cap erosion of Rs 9,400 crore, with HDFC Standard Life Insurance alone losing Rs 4,309 crore. HDFC Standard Life Insurance Co fell the most with the stock declining as much as 6.1% in intra-day trade, followed by ICICI Prudential Life Insurance losing almost 5% \u2014its biggest intraday fall since September 20. SBI Life Insurance and HDFC Standard Life Insurance also recorded their biggest single day percentage fall since their IPOs, earlier this year. Max Financial Services declined 3.9% during the day on the BSE before settling at Rs 565.4, down 3.3%. Kotak Institutional Equities observed in a recent note: \u201cAmong measures, the task force will consider increasing the income tax paid by life insurers to 25% from current 14.3%. We see a higher tax impact and estimate seven to nine per cent lower EV (embedded value) and RoEV for HDFC Life, ICICI Life and Max Life and a 13%-17% decline in NBV margins\u201d. The task force is mandated to study and submit a report on redrafting of the direct tax code within six months. \u201cThe Task Force shall set its own procedures for regulating its work and shall submit its report to the government within six months,\u201d said a finance ministry release on Wednesday. Apart from a higher tax rate, another change which was proposed in the direct tax code in 2009 with respect to life insurance companies included a consideration of income from insurance for policyholders under the exempt-exempt-tax (EET) method. Under this method, insurance income would have been taxable, unless premium payable was less than 5% of sum assured. It is not clear if this aspect too will be revisited. The announcement of a new task force on taxation did spook the insurance stocks, but this didn\u2019t materially alter the broader market sentiment with the benchmark Sensex ending the session in the green, closing at 33,588, up 26.53 points or 0.08% from its previous close.