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Large private sector life insurers are witnessing early signs of increased customer traction — both in terms of leads and conversion to sales — following the implementation of nil goods and services tax (GST).
Insurance companies have passed on the full benefit of GST cuts to consumers, and are not going to change pricing of the products.
Meanwhile, the insurance companies plan to use multiple levers, including renegotiating commissions with distributors and other operating expenses (opex) optimisation measures, to reduce the impact of withdrawal of input tax credit (ITC) following the implementation of nil GST rates.
In early September, the GST Council announced a complete tax exemption on all individual life and health insurance policies, and their reinsurance have also been exempted to boost penetration.
Anup Bagchi, managing director and chief executive officer (MD & CEO), ICICI Prudential Life Insurance, said: “The early trends indicate a positive response after the GST exemption on life insurance. We have observed growth in website traffic, lead volumes, and conversion rates across product segments, indicating enhanced customer traction.”
Similarly, insurance intermediary Policybazaar also noted record traffic for retail life and health insurance. The current average demand surge from the pre-GST baseline (until September 2025) has surpassed the last spike seen during pandemic years. This highlights the kind of immediate impact that the policy change has had on pure protection segments.
“While term insurance has recorded a historic 2.5x surge after no-GST rule implementation, health insurance has clocked a phenomenal 2.2x increase in demand,” Policybazaar said.
In an interaction with Business Standard, Vibha Padalkar, MD & CEO, HDFC Life Insurance, said that the company has witnessed more than 50 per cent growth in its retail term life insurance products in the month of September.
However, insurers have to bear the impact of removal of ITC, which is estimated to be around ₹15,000 crore for the life insurance industry. HDFC Life has an articulated impact of around 0.5 per cent on their embedded value, which amounts to around ₹260 crore. ICICI Prudential Life Insurance has estimated an impact of around 1 per cent on their embedded value.
In their post-earnings analyst meeting, management of ICICI Prudential Life Insurance said, “There are multiple levers we will have to pull. One is, renegotiating commissions. Two is going to be opex optimisation. We do not think they will all come to a close in the coming quarter as these are ongoing discussions.”
Traction rises
HDFC Life expects impact of 0.5% on embedded value, or ₹260 cr
ICICI Prudential Life estimates impact of 1% on embedded value
Plan to mitigate impact through renegotiations of distributor commission, opex optimisation
