Kolkata: One of the momentous decisions in the recent GST rejig was to exempt life and health insurance premiums from GST payments. The premiums on life and health premiums went
up significantly in the past two years and the GST exemption has benefitted millions of policyholders. The premium on term insurance plans, traditional endowment life insurance products and unit-linked plans have all come down.
While the move was expected to benefit the life and health insurance companies, public sector behemoth LIC, which is the largest insurer in the country, benefitted spectacularly. According to repots, it attracted an inflow of more than Rs 1,100 crore on the very first day of the GST being removed from insurance products, which made the policies more attractive and accessible to a large number of people.
More than 20% of premium inflow in August
The surge in LIC’s policies can be gauged from the fact that the monthly premium inflow of LIC in August was Rs 5,000 crore. It means that the inflow in one day was 22% of the entire premium flow collected in August by the public sector insurance company. Reports also stated that the lion’s share of the premium collection was accounted for by regular endowment products and not by any new offerings.
It also siganalled a pent-up sales. The company’s sales in the first weeks of September sales were muted since a large number of customers postponed policy purchases waiting for the GST abolition to take place on and from September 22. The surge in the demand is also partly attributable to the new GST regime. Once the initial excitement settles down, will the sales figures give an indication of the stable rate of inflow.
New business premiums have grown by 6.2in the five-month window between April and August this year compared to what it was in the same period in 2024. This was recorded despite growth in the number of ew policies remained muted. LIC recorded a 3% growth while private insurance companies reported a 10% growth, revealed data from the Life Insurance Council. In the April-August 2025 period, new business premiums went up to reach Rs 1,63,461 from Rs 1,54,193 crore in 2024 in the same period. But the number of policies declined 8.9% to the discomfort of the insurance companies.
Now that GST has been removed from the insurance premiums, the lower premiums could help in policyholders renewing the policies. It could also prompt more citizens to buy insurance.
Insurance scenario in FY25
According to Life Insurance Council data, life insurance companies in the country, recorded 5.1% rise in new business premium collection in FY25 which stood at Rs 3.97 lakh crore. The collection in FY was Rs 3.77 lakh crore. Individual new business premium in FY25 rose to Rs 1.66 lakh crore as compared to Rs 1.49 lakh crore in FY24 — a rise of 11.41%. LIC garnered Rs 2.26 lakh crore in total new business premium for FY25. Of this Rs 62,404.58 crore was on account of from individual new business.
