Page 17 - The Insurance Times February 2026

sales. IRDAI said insurers have been and cost structure. However, a shift of India to improve efficiency and
advised to carry out detailed root- towards higher-margin non- competition in the life insurance sector.
cause analyses to identify systemic participating and protection products, The proposal emerged from
issues driving mis-selling, particularly improved operating efficiencies, and deliberations held by the Life and
across distribution channels. renegotiation of distributor General Insurance Councils as part of
The regulator has also asked insurers to commissions are expected to partly efforts to achieve the goal of Insurance
cushion the impact. for All by 2047.
strengthen internal controls by
improving product suitability Kotak Institutional Equities said year- The report, submitted to the councils
assessments, enhancing agent training on-year margin movement could vary and the Insurance Regulatory and
and aligning sales incentives with long- widely, from a contraction of 300 basis Development Authority of India, noted
term policyholder outcomes. Measures points to an expansion of 100 basis that LIC's dominant position distorts
such as tighter monitoring of points, depending on base effects. competition. In FY24, LIC accounted for
distribution practices and improved Despite margin pressures, annualised about 57 per cent of life insurance
grievance redress mechanisms have premium equivalent growth is premiums, nearly 70 per cent of new
been emphasised to address the issue. expected to remain healthy, aided by policies issued, and over 71 per cent of

IRDAI's renewed focus on mis-selling GST-led demand and normalisation assets under management. The panel
comes amid broader regulatory efforts following revised surrender value said there was a prima facie case for
norms. demerger, divestment or unbundling to
to improve transparency, protect
policyholders and restore trust in unlock value and attract fresh
insurance distribution, especially as the LIC demerger proposed to investment.
industry seeks to expand coverage and improve efficiency, spark The experts suggested that the
improve persistency. government appoint professional
competition merchant bankers to evaluate the
Life insurers may face VNB An expert panel from the Indian most efficient restructuring option.
Institute of Management Kozhikode However, LIC has opposed the
margin pressure after GST has recommended splitting or proposal, warning that a split could
input tax credit loss unbundling Life Insurance Corporation undermine public confidence in
Life insurers are expected to face
pressure on profitability in the third GST rationalisation drives 40% surge in life insurance
quarter of FY26 following the loss of new business premiums in December
input tax credit (ITC) after the goods India's life insurance industry recorded nearly 40 per cent year-on-year
and services tax (GST) on individual life growth in new business premiums (NBP) in December, aided by the
and health insurance premiums was rationalisation of goods and services tax on individual life insurance policies,
reduced from 18 per cent to nil, according to data from the Life Insurance Council.
analysts said. While the GST move has
New business premiums rose 39.5 per cent to Rs. 42,150.8 crore in
supported strong premium growth
December, marking the highest monthly growth recorded in FY26. State-
across life and health segments, it has
owned Life Insurance Corporation of India led the surge, with premiums
also removed the ability of insurers to
jumping 57.45 per cent to Rs. 21,293.9 crore. Private life insurers reported
offset costs through ITC, directly
a 24.93 per cent increase, with premiums rising to Rs. 20,856.9 crore.
impacting margins.
LIC's group single premium segment grew sharply by 75.9 per cent, while
The value of new business (VNB)
individual premiums increased 27.4 per cent. Among private insurers,
margin, a key profitability metric for
individual business rose 20.39 per cent and group business grew 36.35 per
life insurers, is likely to remain under
cent. Major players such as SBI Life, HDFC Life, ICICI Prudential Life and Max
strain during Q3FY26. Analysts noted
Life posted double-digit growth during the month.
that the impact of ITC loss could range
between 175 and 350 basis points, Industry executives said improved affordability following the GST changes
depending on the insurer's product mix has revived demand, particularly in individual life insurance products.
The Insurance Times February 2026 15