The impact of the GST exemption on insurance policies on Axis Max Life Insurance’s Embedded Value is around ₹268 crore, says its MD & CEO Sumit Madan. In an interaction with businessline, Madan says the insurer has decided to recoup the impact of GST through initiatives like negotiations with distributors, cost optimisation and product mix improvements.
Axis Max Life Insurance posted a 27 per cent year-on-year increase in its value of new business (VNB) to ₹974 crore for the first half of this fiscal. What were the factors that contributed to it?
Our VNB growth has come on the strength of our product strategy. Protection remains a preferred segment for us. Our retail protection products have helped us achieve the highest market share in H1 FY26, with a 34 per cent year-on-year growth rate in the pure protection category. Consequently, the retail protection and health segment contributed 13 per cent of overall sales, with 36 per cent growth, supported by a 37 per cent rider attachment rate. Our annuity business grew by 85 per cent in H1 and an exceptional 122 per cent in Q2, driven by strong execution across both retail and corporate annuity pools.
The proprietary channels (agency, direct sales force and e-commerce) continued to be a cornerstone of growth for us. On this strong foundation, our offline proprietary channels recorded 26 per cent APE (annualised premium equivalent) growth in Q2 FY26, while the online business grew 14 per cent, resulting in an overall 22 per cent growth from proprietary channels during the quarter. Our partnership (bancassurance) business also continued to gain traction, supported by the scaling up of partnerships built over the past two years. These new partnerships in the banking and broking space now collectively contribute around 5 per cent of Individual APE.
To what extent did GST exemption on life insurance policies impact the VNB growth for H1 FY26? What was its impact on VNB margin?
While the non-availability of input tax credits (ITC) may have a short-term impact on margins of around 0.6 per cent, despite this, our H1 margins have improved by strong 220 basis points from 21.2 per cent in H1 FY25 to 23.3 per cent in H1 FY26 and our VNB growth is 27 per cent.
For the first half of this financial year, what was the impact of GST rate cuts on the company’s Embedded Value (EV)? What could be the full-year impact? What steps is the insurance company taking to negate the impact going forward?
The impact of GST rate cuts on Embedded Value is around 268 crore. However, this is a one-time impact and will remain the same on a full-year basis as well. While the non-availability of input tax credits may have a short-term impact, we have decided to pass on the entire GST rate cut benefit to the consumers and will recoup the impact of GST through our focused initiatives like distributor renegotiations, cost optimisation and operational efficiencies.
Are you passing on the GST input tax credit (ITC) impact to the distributors? Have you slashed commissions? What is the situation now?
We have decided to pass on the entire GST rate cut benefit to the consumers and will recover the impact of GST through various offsetting actions like product mix improvements, cost optimisation and ongoing negotiations with distributors and vendors. These actions are still underway.
The protection segment is expected to be the biggest beneficiary of the GST rate cut. What kind of sales growth has the company been witnessing in this segment?
The biggest impact has been on term insurance, which is currently growing at a run rate exceeding 60 per cent. We are closely tracking weekly data, and the momentum has sustained well so far. We view this as a medium-to-long-term opportunity for the term category, which has received a meaningful boost due to the GST cut.
What is the company’s full year guidance for VNB margin for this fiscal?
Last fiscal, we reported a full-year margin of 24 per cent. This fiscal, we have recalibrated our product mix to make it more balanced and in line with our long-term stated strategy which was supported by our latest product launches. We launched new propositions across segments, including Savings, Protection and Ulip products with riders. This gives us the reasonable confidence in meeting our earlier guidance of a new business margin in the range of 24–25 per cent.
