NewsStocksPrivate Life Insurers Report 21% Volume Growth in Q3 Following GST Exemption ImplementationPrivate Life Insurers Report 21% Volume Growth in Q3 Following GST Exemption Implementation
Private life insurers reported strong Q3 FY26 recovery with 21% YoY volume growth in Oct-Nov 2025, driven by GST exemption implementation and pent-up demand. Despite positive volumes, sector faces 200-300 bps margin pressure from Input Tax Credit loss. Axis Max Life led with 18% APE growth while ICICI Prudential declined 6%, with companies working on mitigation strategies including cost controls and product repricing.
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Private life insurance companies have reported a strong recovery in business volumes during the third quarter of FY26, with the sector recording a 21% year-on-year increase in volumes during October and November 2025. According to PL Capital's Oct-Dec 2025 earnings preview, this growth was primarily driven by pent-up demand following the implementation of GST exemption on insurance premiums.
The research firm expects this positive momentum to continue through the December quarter, supported by stronger retail protection sales, steady non-participating (NPAR) business, and a gradual recovery in credit protection. "Retail protection volumes are providing a strong tailwind for growth in Q3," said Shreya Khandelwal, Research Analyst at PL Capital.
Margin Pressure Despite Volume Growth
While volume growth has been encouraging, PL Capital cautioned that margins are likely to remain under pressure in the near term due to the loss of Input Tax Credit (ITC) following the GST exemption. The brokerage estimates a significant impact on profitability across the sector.
| Impact Parameter: | Details |
|---|---|
| VNB Margin Drag: | 200-300 basis points for FY26 |
| Mitigation Measures: | Cost controls, commission adjustments, product repricing |
| Recovery Timeline: | Gradual offset expected over coming quarters |
PL Capital expects companies to partly offset this impact through various strategic measures including cost controls, commission adjustments, and product repricing initiatives.
Company-Specific Performance Analysis
The earnings preview revealed divergent growth trends across major private life insurers, with varying performance in annualised premium equivalent (APE) growth and margin expectations.
HDFC Life Performance
HDFC Life demonstrated steady growth with an 11% year-on-year increase in APE on a year-to-date basis. PL Capital expects the company to maintain growth momentum of around 12% in the December quarter, driven by higher term insurance sales and recovery in credit life business. However, muted ULIP and NPAR growth may limit upside potential.
| HDFC Life Metrics: | Details |
|---|---|
| YTD APE Growth: | 11% year-on-year |
| Q3 Expected Growth: | ~12% |
| FY26 Margin Impact: | 300 basis points |
| Q3 VNB Margin Estimate: | 22.50% |
ICICI Prudential Life Challenges
ICICI Prudential Life (IPRU Life) faced headwinds with a 6% year-on-year decline in APE on a year-to-date basis, primarily impacted by slower ULIP sales and flat protection growth. PL Capital expects this decline to persist in Q3, though certain factors could support profitability including higher sum assured, increased rider attachment, and favourable yield curve movements. The brokerage has assumed a VNB margin of 23.00% for the quarter.
Axis Max Life Outperformance
Axis Max Life emerged as the standout performer with an 18% year-on-year APE growth on a year-to-date basis. PL Capital expects the company to sustain this outperformance, supported by strong retail protection demand and recovery in credit life disbursements. The insurer's newly launched products across NPAR, participating, and annuity segments are showing early traction.
| Top Performers Comparison: | Axis Max Life | SBI Life |
|---|---|---|
| YTD APE Growth: | 18% | 14% |
| Q3 Growth Expectation: | Sustained outperformance | ~5% |
| Q3 VNB Margin Estimate: | 22.50% | Broadly stable |
SBI Life Recovery
SBI Life recorded a recovery in volumes during October and November, achieving year-to-date growth of 14%. However, PL Capital expects Q3 growth to moderate to around 5% year-on-year due to a high base effect. The brokerage expects margins to remain broadly stable with minimal impact from the GST exemption.
Key Focus Areas for Investors
PL Capital highlighted several key monitorables that will remain in investor focus during the earnings season. These include growth guidance for Q4 FY26 and FY27, management commentary on margin recovery strategies, and the pace at which insurers absorb the impact of the GST exemption.
The research firm noted that while margins may stay subdued in the near term, several factors could help offset part of the drag:
- Strong growth in protection business
- Improved ULIP margins
- Repricing initiatives in NPAR products
The sector's ability to balance volume growth with margin preservation will be crucial for sustained performance in the coming quarters.
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