Expectations of cuts in Goods and Services Tax (GST) on insurance products led many consumers to defer purchases in August, pulling down life insurance sales and weighing on overall industry growth.
After three months of double-digit expansion, India’s life and general insurance sectors lost momentum in August, with both industries reporting weaker-than-expected premium growth.
A JM Financial report said the August slowdown was a temporary anomaly, caused by sector-specific factors.
For life insurance, deferred purchases on expectations of GST cuts, plus high base from last year. For general insurers, weakness in crop insurance, monsoon-related volatility in health claims, and portfolio recalibration by insurers. Both sectors also saw recalibration in distribution strategies, as insurers adjusted product mixes and prepared for regulatory shifts.
Despite the weak August print, however, analysts remain optimistic.
For life insurance, growth is expected to revive from Q3 FY26 as GST cuts stimulate demand and surrender norms stabilise. General insurers should see growth normalise by October, adding 3-4 percentage points on a like-to-like basis once the crop base effect fades.
“August numbers are not reflective of the underlying demand trend. With regulatory clarity, seasonal headwinds behind us, and structural drivers intact, we see growth picking up in Q3,” JM Financial noted.
Life Insurance: GST overhang halts growth
The life insurance industry reported flattish performance in August, with individual annualised premium equivalent (APE) slipping 0.6 percent year-on-year to Rs 95,360 crore. While private life insurers managed a modest 1.3 percent growth at Rs 68,615 crore, state-run Life Insurance Corporation of India (LIC) saw a 5.1 percent contraction, dragging down overall industry momentum.
This slowdown comes after robust expansion in June with an increase of 13 percent year-on-year and July with an increase of 14 percent year-on-year. Analysts said, expectations of GST cuts on insurance products led consumers to delay purchase decisions, hitting August volumes. “Weak growth in August was potentially due to delays in purchase decisions given expectation of GST cuts,” they said.
Performance diverged across insurers. Axis Max Life grew 16 percent year-on-year in individual APE, while Tata AIA posted a 12.8 percent rise. HDFC Life was broadly flat (+0.7 percent), but ICICI Prudential Life slipped 13.1 percent due to a high base last year. Among unlisted peers, Aditya Birla Sun Life grew 3.7 percent, while Bajaj Allianz contracted 5.6 percent.
Despite the August lull, the underlying trajectory remains healthy.
Year-to-date (YTD) private sector individual APE grew 8.1 percent, translating to a 15 percent two-year CAGR. Industry-wide YTD growth was 4.8 percent on a high base. Analysts expect revival from Q3 as GST cuts kick in and base effects ease.
General insurance: Crop drag, monsoon strain
The general insurance sector also witnessed softness, with gross direct premium income (GDPI) rising just 1.6 percent year-on-year to Rs 2.5 lakh crore in August, following 3 percent growth in July. YTD FY26 growth stood at 6 percent.
Public sector insurers outpaced the industry, posting 15 percent year-on-year growth and contributing nearly two-thirds of incremental industry premiums, while private multi-line players remained flat.
Standalone health insurers (SAHIs) grew only 4 percent year-on-year, sharply lower than July’s 10 percent.
Segment trends were mixed. The crop insurance segment, which makes up 9 percent of the book, contracted heavily, weighing on growth.
Conversely, the fire insurance segment, comprising of around 10 percent, recorded strong expansion, indicating a portfolio shift that could aid profitability.
Among private players, Bajaj Allianz bounced back with 18.8 percent growth after a weak July, and ICICI Lombard returned to positive territory with an increase of 2.1 percent year-on-year after two months of decline. Go Digit maintained momentum at 13.6 percent growth.
On the health side, Star Health grew just 1.8 percent, while Niva Bupa rose 2.7 percent. Aditya Birla Health was the standout with a 37.1 percent jump.
