GST rate cut uncertainty dents life insurers’ new business 22% in Dec
New business of life insurers declined almost 22% year on year in December to Rs.30,218.71 crore, likely due to the continuing suspense over the indirect tax levies on insurance policies with the GST Council deferring a call on an expected tax cut at its December 21 meeting, along with tight liquidity conditions and a general slowdown in the economy.
December’s drop in new business marks a deepening contraction from November, when such business fell for the first time in 2024-25, albeit by a relatively moderate 4.5% to Rs.25,306.56 crore In December 2023, insurers had reported Rs.38,583.13 crore as first year premium receipts.
One of the contributing factors linked to the downward trend over the past two months, is the new surrender value norm that came into effect from October. For the nine months ended December 2024, new business has increased almost 10% to Rs.2,75,086.92 crore, data released by the Life Insurance Council showed.
New business of life insurers declined almost 22% year on year in December to Rs.30,218.71 crore, likely due to the continuing suspense over the indirect tax levies on insurance policies with the GST Council deferring a call on an expected tax cut at its December 21 meeting, along with tight liquidity conditions and a general slowdown in the economy.
December’s drop in new business marks a deepening contraction from November, when such business fell for the first time in 2024-25, albeit by a relatively moderate 4.5% to Rs.25,306.56 crore In December 2023, insurers had reported Rs.38,583.13 crore as first year premium receipts.
One of the contributing factors linked to the downward trend over the past two months, is the new surrender value norm that came into effect from October. For the nine months ended December 2024, new business has increased almost 10% to Rs.2,75,086.92 crore, data released by the Life Insurance Council showed.
In December, private players fared better than the State-owned market leader Life Insurance Corporation of India (LIC), clocking a 7% increase in new business to Rs.16,694.85 crore. For the nine-month period, the first-year premium of the private life insurers rose nearly 14% to Rs.1,17,130.96 crore.
For LIC, new business was down more than 41% to Rs.13,523.87 crore in December 2024 from Rs.22,981.28 crore a year earlier. However, the behemoth’s nine-month tally was 7.16% higher than the previous year at Rs.1,57,955.95 crore.
