GST indecision pressure insurance stocks; HDFC Life, SBI Life shed up to 4%

Shares of insurance companies, including life and general insurance forms, were trading weak on profit booking, falling by up to 4 per cent on the BSE in Tuesday’s intra-day trade in an otherwise firm market.

The council has also announced the formation of a new Group of Ministers (GoM) to review the issue of GST rate reduction on health insurance. The GoM has been tasked with submitting its report by the end of October, after which the GST Council, in its November meeting, will make a final decision based on the report.

While a decision on GST is awaited, stock of insurance companies could trade in a broad range, ICICI Direct Research said in a research note.

Meanwhile, as per industry body Life Insurance Council, the industry has reported healthy growth in business momentum, with industry premium increasing 22 per cent year-on-year (Y-o-Y) for the month of August 2024, while between April and August 2024, the growth was at 20.8 per cent YoY.

In terms of annual premium equivalent (APE), private players delivered 9 per cent Y-o-Y growth, and LIC reported a 13 per cent YoY growth led by single premium.

The industry’s regulatory body Insurance Regulatory and Development Authority of India (IRDAI) announced new regulations regarding surrender values, to be implemented from October 1, 2024.

Moreover, the industry’s product and commission construct could also undergo notable changes, leading to volatility in premium growth for the rest of FY25.

Nevertheless, over the medium term, Motilal Oswal Financial Services believe these changes are favorable for customers and will bring back growth for the industry.