Life, general insurers to see healthy Q3FY26 growth as GST changes aid demand: Emkay Global Financial Services
Life insurers set for healthy APE growth as base effects normalise
Motor and retail health segments drive general insurance growth momentum
Mumbai, 06th January 2026: Emkay Global Financial Services in its latest report on Insurance titled Q3FY26 – GST changes to drive growth, but affect profitability cited that India’s insurance sector is expected to deliver a satisfactory operating performance in Q3FY26, supported by favourable GST-related tailwinds across life, general and health insurance segments, While premium growth momentum is likely to strengthen, profitability metrics are expected to remain under pressure amid GST input tax credit (ITC) losses, elevated commission payouts and regulatory adjustments.
Life insurance companies are projected to report healthy Annualised Premium Equivalent (APE) growth during the quarter, aided by improved affordability following GST changes and the normalization of base effects after the implementation of revised surrender regulations. Protection products are expected to be the key beneficiary of the GST tailwind, with increasing customer preference for term insurance driving volumes. Among private insurers, Axis Max Life is expected to remain the fastest-growing player, followed by SBI Life, HDFC Life and ICICI Prudential Life. Life Insurance Corporation of India (LIC) is also likely to post strong APE growth, supported by a favourable base in the retail segment and robust traction in group business.
Despite the healthy growth outlook, Value of New Business (VNB) margins for life insurers are expected to remain under pressure in Q3FY26 due to the impact of GST ITC losses. This margin compression is likely to be partially mitigated by a favourable shift in product mix towards higher-margin non-par and protection products, continued negotiations with distributors, and improvements in operational efficiency. Additionally, costs attributable to group business continue to benefit from ITC availability, offering some relief to margins. The recent implementation of labour codes, which has resulted in higher gratuity provisions, is expected to further weigh on reported profitability during the quarter.
General insurance companies are expected to report healthy Gross Written Premium (GWP) growth, driven primarily by strong momentum in the Motor and Health insurance segments. The reduction in GST rates is likely to support new vehicle sales, thereby boosting growth in the Motor Own Damage segment. Meanwhile, the retail health insurance segment is expected to see robust growth, supported by improved affordability following GST rate exemptions. However, the group health segment may witness relatively modest growth due to heightened competitive intensity.
Combined ratios for general insurers are expected to remain elevated during the quarter, largely due to higher commission payouts. That said, select players may see marginal improvement in claims ratios. Emkay Global expects GST ITC losses to have a limited impact on multi-line general insurers, while profitability is likely to be supported by healthy investment income, resulting in stable to improving profit after tax (PAT) growth during Q3FY26.
The health insurance segment is projected to deliver strong growth in retail health premiums, supported by GST rate exemptions and normalization of the base impact of the 1/n regulation. Improved affordability is expected to drive customer demand, particularly in individual health policies. While claims ratios are likely to remain elevated due to increased claims frequency and severity, a modest improvement in claims experience is anticipated during the quarter. Emkay Global Financial Services remains watchful of the claims trajectory going forward, given the persistent pressure on medical costs.
Looking ahead, Emkay expects life insurers to sustain healthy APE growth momentum, driven by GST tailwinds and normalization of base effects. General insurers are also likely to maintain steady growth in the Motor and Health segments, benefitting from continued demand and favourable GST changes. Health insurers are expected to see sustained premium growth, supported by improved affordability and easing regulatory headwinds.
From a market perspective, the report notes that despite ongoing regulatory overhangs—particularly with respect to commission regulations—revival in growth momentum and improvement in profitability will remain key drivers for insurance stock performance. The brokerage has rolled forward its target prices for the insurance universe to December 2026, reflecting expectations of sustained sector growth amid a gradually stabilizing regulatory environment.
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