Sector Watch: Premium growth, FDI cap hike — what lies ahead for insurance stocks

Experts indicate that the overall insurance sector has positive momentum, although a few challenges, such as the geopolitical impact from the West Asia conflict on the equity markets in the near term and updated foreign direct investment (FDI) norms, are expected to impact the earnings for the period.

Latest updates in Q4

In February 2026, the Indian government removed the cap on foreign direct investments (FDI) in the insurance sector via the Sabka Bima Sabki Raksha bill, which will allow foreign insurance companies to hold full ownership in Indian insurance sector companies across all segments, including life, health, general, etc.

The earlier FDI cap of 74% has now been extended to a 100% FDI limit, which lets companies own a stake without a mandatory local company as a partner in an effort to increase competition and capital in the market.

Earlier in the financial year 2025-26, the GST council removed the 18% tax on all individual life and health insurance policies to make it nil, which came into effect from September 22. The effect of this move is expected to be felt over a year as the cost to insurance customers reduces over time.

"The GST rate on all individual life insurance and individual health insurance policies, including reinsurance of the same, has been reduced from 18% to zero, and it has come into effect on September 22, 2025,” according to the Department of Financial Services website.

Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) also removed the age criteria for purchasing a health insurance policy, giving the opportunity to people aged 60-65 years to buy plans.

Among other key announcements, the authorities also reduced the overall waiting period for pre-existing diseases to 36 months or 3 years, compared to their earlier 4-year level.

Expert take

Although the longer-term outlook of the insurance sector remains positive on the backdrop of healthy premium growth and momentum in the sector, experts highlight that the near-term concerns can potentially impact the companies in the upcoming Q4 results.

“In the longer term, the sentiment of the sector is positive because of the underpenetration we have in the life insurance segment. And looking ahead, for the others, the claim ratios should reduce, increasing the margins for operators in the health and general insurance segment,” said Mumbai-based independent capital markets analyst Ambareesh Baliga.

“We have also seen the premium collections going up this time,” said Baliga. He also explained that even though there is an increase in base premiums charged by the companies, the discount in GST is higher, reducing the overall cost to customers.

SEBI-registered capital markets analyst and the founder of Fintrekk Capital, Amit Kumar Gupta, highlighted that since all the insurance companies invest in the equity markets and the markets have been taking a beating over the last one-month period, it will also impact the earnings for the overall sector in the fourth-quarter results, as a lot of their investments are through Unit Linked Insurance Plans, or ULIPs.

Baliga also acknowledged the impact of the disruption in the market, but the expert highlighted that this is temporary for the insurance companies without any prolonged, long-term effect on the industry.

On the FDI front, both capital market experts agreed that with the bigger foreign operators entering the market, the competition is set to rise, but at the same time, the valuation of buyouts will also increase as companies try to enter the Indian market.

“With the FDI limit at 100%, this is expected to bring a lot of foreign competition to the domestic markets. There is likely to be a lot of consolidation amongst the insurance companies in the next five years,” said Amit Kumar Gupta.

Premium collections for March 2026

ICICI Lombard General Insurance, the largest general insurance provider by market capitalisation (M-Cap), recorded a 21% rise in its gross direct premium underwritten to ₹2,185.18 crore as of March 2026, compared to ₹1,807.91 crore in the same period a year ago.

Following ICICI Lombard was Go Digit General Insurance, which recorded a nearly 10% rise in its gross premiums to ₹755.77 crore in March 2026, compared to ₹687.45 crore in the same period a year ago, according to General Insurance Council data.

The data also showed that Star Health & Allied Insurance witnessed a nearly 16% hike in premiums to ₹2,567.37 crore in March 2026, compared to ₹2,218.19 crore in the same period a year ago, as per the data.

State-run firm New India Assurance witnessed over a 13% rise in its gross premiums to ₹3,276.2 crore, compared to ₹2,890.66 crore premiums in the same period the previous year.

Among the top five general insurance companies was also Niva Bupa Health Insurance, which recorded a 37% rise in its gross premiums to ₹1,109.32 crore in March this year, compared to ₹809.48 crore in the same period the previous calendar year.

Top life insurance stocks in focus

LIC shares closed 4.73% higher at ₹841.70 after Wednesday’s stock market session, compared to ₹803.65 at the previous market close, NSE data showed. As of 10:26 am, LIC shares were trading 0.95% higher at ₹850.15 on Thursday, April 16.

SBI Life Insurance shares closed 3% lower at ₹1,971 after Wednesday’s market session, compared to ₹1,914.40 at the previous market close, according to the exchange data. As of 10:28 am, SBI Life shares were trading 0.77% higher at ₹1,987 on Thursday.

HDFC Life Insurance shares closed 3.45% higher at ₹640 after the market session on April 15, compared to ₹619.10 at the previous market close, NSE data showed. As of 10:30 am, the HDFC Life shares were trading 1.23% higher at ₹648.30 on April 16.

ICICI Prudential Life shares closed 2.7% higher at ₹561.25 after Wednesday’s market close, compared to ₹546.50 at the previous trading session, according to the exchange data. As of 10:31 am, the company’s stock was trading 0.61% higher at ₹564.70 on Thursday.

The company announced its results on April 14, where the company’s net profit rose 62% to ₹623.91 crore, compared to ₹385.28 crore in the fourth quarter a year ago. ICICI Prudential Life’s net premium income rose by 17% to ₹19,180 crore in Q4 of the financial year ended 2025-26, compared to ₹16,369 crore in the same period a year ago.

Top general/health insurance stocks in focus

ICICI Lombard shares closed 4.25% higher at ₹1,864 after Wednesday’s trading session compared to ₹1,782.20 at the previous market close, NSE data showed. As of 10:32 am, the company’s shares were trading 1.29% higher at ₹1,882 on April 16.

ICICI Lombard GIC’s Q4 results showed that the company's net profits jumped 7.25% to ₹546.56 crore, compared to ₹509.59 crore in the same period of the previous financial year, according to the exchange filings.

The company’s total income recorded a 17% YoY rise to ₹6,618.76 crore in the January to March quarter of FY2025-26, compared to ₹5,651.17 crore in the same period a year ago.

Go Digit shares closed 0.31% lower at ₹320.10 on April 15, compared to ₹319.10 at the previous market close, according to the exchange data. As of 10:33 am, Go Digit stock was trading 0.34% higher at ₹321.40 on Thursday.

Star Health shares closed 1.71% higher at ₹479 on Wednesday, compared to ₹470.95 at the previous trading close, NSE data showed. As of 10:35 am, the stock was trading 3% higher at ₹493.80 on Thursday.

New India Assurance shares closed 0.36% higher at ₹172.29 after Wednesday’s trading session, compared to ₹171.67 at the previous stock market close, according to NSE data. As of 10:36 am, the company shares were trading 0.75% lower at ₹171 on Thursday.

Niva Bupa shares closed 2.5% higher at ₹76.17 after the market session on April 15, compared to ₹74.31 at the previous market close, according to the exchange data. As of 10:36 am, the company’s stock was trading 3.23% higher at ₹78.67 on Thursday.