Budget 2025: Stocks in focus in the insurance sector

Additionally, the sector expects potential revisions to the GST on term life insurance policies to lower costs and enhance accessibility to essential protection plans.

Moneycontrol News

January 31, 2025 / 15:10 IST

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In the upcoming budget, the insurance industry is seeking tax benefits on annuity and pension products, including those under the National Pension System (NPS), to promote higher retirement savings. Additionally, the sector expects potential revisions to the GST on term life insurance policies to lower costs and enhance accessibility to essential protection plans.

Here are the key stocks that are likely to be in focus on Budget Day.

SBI Life
In an industry where distribution reach and cost control are key competitive advantages, SBI Life Insurance benefits from its exclusive access to SBI’s branch network and a highly productive agency channel, said BNP Paribas in a report. Between FY19 and FY24, SBI Life’s individual new business premium market share surged from 13 percent to 15.8 percent, making it the largest private life insurer. “Its focus on a profitable product mix has driven significant margin expansion, resulting in a 33 percent CAGR in value of new business,” the report added. Further, the company has a focus on the agency channel, which they expect to grow at a much faster rate than banca over the next few years.

ICICI Prudential Life Insurance
The company has continued to report stronger annualised premium equivalent (APE) growth compared to the industry and other private insurers for another quarter. The company faces key risks, including potential adverse regulatory changes and a slowdown in the growth of ULIPs. Furthermore, there is a challenge in offsetting the slowdown in ULIP growth with increased sales of non-participating (non-par) products.

Star Health
The company has consistently showed robust underwriting capabilities, establishing a strong and sustainable competitive edge, said HFDC Securities in a report. It added that by operating within the IRDAI’s 35 percent Expense of Management (EoM) limit, the company has a clear advantage in sourcing high-quality business. “As the largest standalone health insurer, with a 32 percent retail gross direct premium income market share as of December 2024, Star Health’s competitive position is further strengthened by its agency-driven distribution network, retail-focused business mix, and industry-leading operating expense ratios,” the brokerage firm added.