Insurance Companies Q3FY26 Preview: GST Cuts To Drive Growth But Profitability To Be Under Pressure
Term insurance products are expected to be the key beneficiary of the GST tailwind, with increasing customer preference driving volumes: Reports
MUMBAI: Insurance companies are expected to deliver healthy operating performance in Q3FY26, supported by favourable GST-related tailwinds across life, general and health insurance segments. While premium growth momentum is likely to strengthen, profitability metrics are expected to remain under pressure amid GST input tax credit (ITC) losses, elevated commission payouts and regulatory adjustments.
According to a report by Emkay Global, life insurance companies are projected to report healthy retail business growth (measured in terms of Annualised Premium Equivalent) during the quarter, aided by improved affordability following GST changes and the normalization of base effects after the implementation of revised surrender regulations. Term insurance products are expected to be the key beneficiary of the GST tailwind, with increasing customer preference driving volumes. General insurance companies are expected to report healthy Gross Written Premium growth, driven primarily by strong momentum in the motor and health insurance segments.
The reduction in GST rates have driven new vehicle sales, thereby boosting growth in
the motor own damage (OD) segment. Retail health insurance segment is also expected to see robust growth, supported by improved affordability following GST rate exemptions and normalization of the 1/n regulation base effect. However, the group health segment may witness relatively modest growth due to heightened competitive intensity. Combined ratios for general insurers are expected to remain elevated during the quarter, largely due to higher commission payouts.
That said, select players may see marginal improvement in claims ratios.
“Among private listed players, Axis Max Life is likely to remain the fastest growing player, followed by SBI Life, HDFC Life, and ICICI Pru Life. LIC is expected to report strong individual premium growth owing to a favorable base in retail and backed by robust growth in the Group business,” said the report authored by analysts Avinash Singh and Mahek Shah.
“ICICI General Insurance and Star Health would continue to generate investment returns to register reasonable net profit during 3QFY26. We expect net profit to de-grow by -1.6 per cent quarter on quarter for ICICI General Insurance whereas net profit to grow 32.3 per cent from a low base of 2QFY26 for Star Health,” said Yes Securities.
