Insurance stocks were trading in green in early trade on September 5 after companies said they expect minimal impact of GST reforms on embedded value.
Shares of Niva Bupa led the gains among the private insurers by rising 5% to trade at Rs 85.35 apiece while those of ICICI Prudential and HDFC Life were trading 0.56% and 0.3% higher, respectively.
ICICI Prudential Life Insurance co. Ltd., expects an impact of nearly 1% from the recent GST rate cuts on its embedded value, a measure to estimate the consolidated value of shareholders' interests, the company informed exchanges on September 5. The GST Council on September 3 approved individual life insurance policies to be exempted from goods and services taxes with effect from September 22.
"We welcome this landmark reform aimed at making life insurance affordable and accessible to a wider section of society," the exchange filing said. "... We believe that the improved affordability and accessibility of life insurance policies is expected to increase demand and be value accretive for the company."
Max Financial Services Ltd. expects an impact of below 1% on the embedded value on its arm Axis Max Life Insurance Ltd., from the recently announced GST rate cuts, the company informed exchanges on September 5.
"We believe that this change, especially for the pure protection business of (Axis Max Life), will improve the affordability for consumers and should aid in reducing the protection gap in our country," the exchange filing said.
On September 4, HDFC Life noted that the reform "lowers the cost for customers, thereby encouraging them to purchase much needed life insurance and help protect themselves and their families".
"While we begin transitioning our systems and products to the new regime w.e.f. September 22, 2025, we believe that this change will spur demand over time and hence be accretive to our Value of New Business (VNB). We expect a non-material (less than 0.5%) impact on our Embedded Value (EV). As we have done in the past, we will continue to work towards our aspiration of doubling our Value of New Business over 4 to 4.5 years.
"Overall, this reform is structurally positive for the life insurance sector, as it is expected to drive higher penetration, improve persistency, and accelerate long-term growth in line with our sectoral vision of “Insurance for All by 2047," said HDFC Life.
SBI Life Insurance Co. Ltd. sees only a marginal impact of less than 0.2% on the company's embedded value.
"The Company welcomes the reform, recognising it as a profoundly meaningful step towards making insurance more affordable and ensuring financial security is accessible to all," SBI Life said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
