India life insurers face margin squeeze as sales climb

Policy count rose 15% in Q3 FY26; An insurer logged 27% APE growth in December.

India’s private life insurers are still selling more policies, but profits on new business are likely to come under pressure this quarter because of tax and cost changes, according to Nomura’s Global Markets Research.

Industry data shows private life insurers’ individual annualised premium equivalent (APE) rose 21% year on year in the third quarter of FY 2026, supported by a 15% increase in the number of policies sold. 

Growth remained strong in December 2025, with private insurers reporting 20% year-on-year growth in individual APE. State-owned LIC recorded higher growth of 27%.

The challenge for insurers is margins. Nomura expects value of new business (VNB) margins to fall in the third quarter due to the GST cut introduced in September 2025 and the rollout of new labour laws, which are expected to increase operating costs.

Amongst listed insurers, HDFC Life and Axis Max Life are expected to see the most pressure on margins. 

HDFC Life’s VNB margin is estimated at 23.9% for the quarter, down from 26.2% a year earlier. Axis Max Life’s margin is expected at 22.2%, compared with 23.2% a year ago and lower than the previous quarter.

SBI Life is expected to be more resilient, with a VNB margin of 27.3%, slightly higher than 26.9% a year earlier. 

ICICI Prudential Life is expected to report a VNB margin of 23.7%, up from 21.2% last year, although lower than the previous quarter.

Despite weaker margins, higher sales volumes are expected to support growth in the value of new business. SBI Life’s VNB is estimated at $0.3b (₹23.5b), up 26% year on year, with APE of $1.0b (₹86.2b), up 24%.

Axis Max Life is expected to post VNB of $0.1b (₹6.0b), up 23%, with APE of $0.3b (₹27.0b), up 28%. 

HDFC Life’s VNB is estimated at $0.1b (₹9.6b), up 3%, with APE of $0.4b (₹40.1b), up 12%. ICICI

Prudential Life’s VNB is projected at $0.1b (₹6.0b), up 17%, with APE of $0.3b (₹25.5b), up 5%.

There are early signs that protection policy sales have improved after the GST change, based on higher protection sums assured reported by private insurers in October and November 2025.

($1.00 = ₹90.22)