In Monday's intraday trading, shares of insurance companies, including general and life insurers, fell by as much as 6% on the BSE following the Goods and Services Tax (GST) Council's decision to postpone the GST on insurance decision. Therefore, the GST on insurance has not changed.
Because the Group of Ministers (GoM) panel needed additional time to complete its reports, the decisions to lower the GST on life and health insurance premiums and to rationalize the rates of 148 products were postponed.
The rate rationalization report is not final. The Government of India is expecting comments from the Insurance Regulatory and Development Authority of India (IRDAI) regarding health and life insurance pricing. During the post-meeting news briefing, Union Finance Minister Nirmala Sitharaman stated that they would only complete their reports and send them to the Council for discussion after receiving these inputs.
The General Insurance Corporation of India's (Rs 485.55) and New India Assurance Company's (Rs 200.80) shares fell 3% and 6%, respectively. In an otherwise lackluster market, General Insurance Corporation of India rose 14% to Rs 502.75 and New India Assurance gained 4% to Rs 214.15 on Friday.
SBI Life Insurance Company, HDFC Life Insurance Company, Star Health and Allied Insurance Company, Life Insurance Corporation of India, Niva Bupa Health Insurance Company, ICICI Prudential Life Insurance Company, and ICICI Lombard General Insurance Company were among the other insurance stocks that saw declines of between 1% and 2%. By contrast, at 09:46 AM, the BSE Sensex was up 0.67 percent at 78,567. In contrast to the benchmark index's 2% dip, the stock prices of ICICI Prudential, HDFC Life, and SBI Life have dropped between 6% and 10% in a single month.
Although the issue is still being discussed, uncertainty around the council's decision and implementation schedules is anticipated to keep insurance stocks under pressure in the near future, according to a note from ICICI Securities.
The brokerage firm claims that, in comparison to global standards, insurance penetration is still low. The sector's main long-term growth drivers include factors like a widening protection gap and rising per capita income. "India has a significant protection gap, and credit protection solutions are still in their infancy but might expand significantly as the country's retail lending penetration improves. Therefore, we think there is a lot of room for expansion in the insurance industry in India," it continued.
In light of this, analysts predict that powerful companies with the ideal combination of goods, services, and distribution will probably benefit disproportionately from the opportunity. Profitability may be impacted by the increased risk of competition and regulatory changes.
