Investors are likely to keep a close tab on insurance stocks, including LIC, SBI Life Insurance, HDFC Life Insurance, and ICICI Prudential, closely in Wednesday’s (September 10) session, as the CEOs of several insurance companies will reportedly meet with Finance Ministry officials on Wednesday to present their demand and discuss concerns regarding the recent changes in the GST rates.

According to media reports, insurance company CEOs had requested a meeting with the Finance Ministry and CBIC (Central Board of Indirect Taxes & Customs) officials ahead of the implementation of GST 2.0 from September 22.

According to a PTI report, CBIC chairman Sanjay Kumar Agarwal will meet various trade bodies and industries, including Assocham, FICCI, CII and PHDCCI, on September 10 to discuss the GST reforms, rate rationalisation and their implementation.

Earlier, PTI reported Finance Minister Nirmala Sitharaman saying that CBIC will engage with the insurance industry to work out a transition mechanism for the accumulated input tax credit (ITC) of policies that have been exempted from tax with effect from September 22.

On September 3, the GST Council, Chaired by FM Sitharaman, announced that individual life and health insurance policies will be fully exempt from GST. The move, according to experts, may impact the profitability of insurance companies in the short term due to slower repricing of existing policies.

According to a report by HSBC Securities and Capital Markets (India), health insurance premiums could get cheaper due to the zero GST on health insurance. However, this may trigger a revenue shortfall of $1.2-1.4 billion annually from GST on insurance premiums.

“While lower premiums are expected to boost demand, insurance companies could see a 3-6 per cent impact on combined ratios (CR) in the retail health segment, primarily due to slower repricing of renewals, which may take 12-18 months,” the HSBC report said.

Insurance stocks today

The majority of insurance stocks, including LIC, SBI Life Insurance, ICICI Prudential, ICICI Lombard, and HDFC Life, rose by a per cent in trade on Wednesday. Market sentiment was positive after US President Donald Trump’s updates signalled that an India-US trade deal could materialise soon.

Equity benchmarks, the Sensex and the Nifty 50, traded over half a per cent higher around 10:25 am.

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