SBI General Insurance expects GST cut to hit profitability in near term

Amid slowdown in the general insurance industry, SBI General Insurance’s Managing Director (MD) & Chief Executive Officer (CEO) Naveen Chandra Jha spoke with Aathira Varier in a virtual meeting about the company’s strategies for maintaining growth. He also talked about plans for H2FY26, after implementation of the revised goods and services tax (GST) rates, among other issues. Edited excerpts:

 

How do you see the performance of the company so far in the first half of the financial year?

 

H1FY26 was very challenging for the industry because of the 1/N impact. Also, crop insurance prices went down significantly for most companies, including us. But despite all these things, we grew by more than 10 per cent against private sector growth.

 

Growth in the last quarter was muted for the company…. 

Last quarter, we grew by around 3.4 per cent. Last month was bad, because we got a hit of ₹357 crore in crop insurance which was around ₹580 crore less than H1FY26.  

So, the overall gross direct premium income (GDPI) growth in September was a negative 12 per cent. But overall GDPI growth in H1FY26 was 9.36 per cent and ex-crop growth last month (September) was also 21 per cent. From October, very little crop business remains, so we expect significant growth in other areas. I think the industry will also improve in the next six months, but our growth will be much better.

 

What has been the impact of change in GST rates for the company? 

The GST impact will cause some strain on profitability in the near future. But, the way we are increasing business, we will recover it in the next 3-4 months. Health insurance has become more affordable, and our health business has seen very good growth last month. So, whatever the impact, it should be taken care of in the next 2-3 months. Also, due to the GST cut, motor business has also increased 

significantly. We are growing by 17 per cent in motor against industry growth of 

8 per cent.

 

What is the impact of removing GST input tax credit (ITC) on the company?    

We did not have a significant impact. By the end of the year, the impact will be nearly zero. Larger health insurers might feel the heat, but we are not expecting any major impact. Maybe, there might be around 1–2 basis points (bps) hit on solvency, and 3–4 per cent on profitability from health. But since our top line is growing strongly, it will have a positive impact overall. In motor insurance, we have seen good practices returning — so no major negative impact there either. Overall, it will give better results for our company. 

Right now, we are not repricing products or changing commission rates. Since the GST decision was taken by the Centre, we also need to shoulder that. The idea is that higher sales will offset lower GST. We are confident that with 40–45 per cent growth in health and 20 per cent in motor, profitability will remain intact in the long run. We have taken a hit, but it is not significant and not impacting our balance sheet meaningfully.

 

How do you see the growth in the remaining year?   

During the next six months, we can grow around 20 per cent. Industry may grow 15 per cent. We hope to create new milestones in the next quarter. The growth drivers will be motor, health, fire, and personal accident — the four major segments. Growth will be much better than in the first half as we managed to grow 9 per cent despite crop insurance and 1/N impact.  

 

What are your initial public offering (IPO) plans? 

That decision lies with the promoters — State Bank of India (SBI) and others. As far as we are concerned, we are fully ready. We are going to give a very sustainable performance in top line and bottom line.