• Notification Date: 27-12-2024
• Notification No: N/A

Insurance Stocks Fall as GST Decision on Premiums Deferred

Shares of insurance companies, life and general insurers included, dropped as much as 6% in intra-day trade on Monday. That followed a decision by the GST Council to defer its own decision on GST rates on insurance premiums, keeping status quo for now. In such uncertainty over the timing of possible changes, investors were cautious.

Among the majors, New India Assurance plunged sharply by 6% to Rs 200.80 and General Insurance Corporation of India by 3% to Rs 485.55 after a strong rally on Friday when General Insurance Corporation jumped 14%, and New India Assurance climbed 4%. Other insurance stocks, including ICICI Prudential Life, SBI Life, HDFC Life, ICICI Lombard, and Star Health, declined more modestly between 1% and 2%.

The eagerly awaited GST Council's decision on reducing GST rates for life and health insurance premiums has been put off as the Group of Ministers (GoM) panel needs more time to finalize its recommendations. Finance Minister Nirmala Sitharaman said that the panel is waiting for inputs from the Insurance Regulatory and Development Authority of India (IRDAI) before submitting its report to the GST Council.

Over the last month, the stock prices of big insurers such as ICICI Prudential, HDFC Life, and SBI Life have declined by 6% to 10%, lagging behind BSE Sensex, which dropped modestly by 2%. Analysts are optimistic regarding the long-term growth potential of the under-penetrated Indian insurance market but do note that regulatory uncertainties along with competition may keep the sector under pressure in the short term.