We will try to keep the VNB margin within the 24% range by this fiscal end: HDFC Life Executive Director Niraj Shah

For Q3’26, HDFC Life Insurance’s net premium income grew 8.77 percent year-on-year to ₹18,242.39 crore. What has contributed to this growth?

During the quarter, individual APE (Annualized Premium Equivalent) growth was 13 percent. Even over the nine-month period (9MFY26), the growth was 11 percent. On a two-year CAGR basis, that number was 17 percent. Over a nine-month period, this is growing faster than the sector. Various business units drove the growth figure for us in the third quarter. But the two numbers we’re looking at are: individual APE and credit insurance business on the group side, which grew by 25 percent. Within individual APE, the most encouraging figure was individual protection, which grew by 70 percent in the third quarter. Individual commercial growth has also grown very strongly: 55 percent over the quarter and 33 percent over the nine-month period.

Was the high growth in the individual protection segment due to the GST exemption on policies?

Even before the GST, we were growing 27 percent in patronage. And GST (exemption) has of course been a boost for that. So over the nine months, individual term APE growth was 42 percent.

What other products saw a sales boost thanks to the GST cut?

Protection has had the maximum impact. Otherwise, I think it will take some time for customers to realize that the products are a lot better cost-wise – the cost to the customer is lower because of these changes. But it is most easily visible in a protection product. For the rest of the products, Unit Linked is also doing quite well. Moreover, there is a significant improvement because you pay lower costs. But I wouldn’t attribute that to GST. So far, it has mainly been about the individual protection side.

For the third quarter, VNB growth was hit due to the GST change. What are the prospects for the VNB margin this financial year?

Considering the impact of GST, VNB growth for Q3FY26 was 3 percent. Otherwise the number would have been 13 percent. The margin for the quarter was 24 percent and for the first half of 26 it was 24.4 percent. The annualized GST impact for us was 300 basis points, and we had said we would try to reduce the impact to close to 200 basis points. That’s what we managed to do.

So we have now reduced the GST impact to 190 basis points, and we hope to reduce it further in the fourth quarter. So if you were to take out the GST impact, the margins actually increase. We will try to get the margin as close as possible to where we started the year, but will still be lower than the starting point as this has been quite a big change that has happened mid-year. We will try to keep the margin within the 24 percent range by the end of this financial year.

Have the company’s interactions with distributors on the review of commission structures been completed as insurers are now unable to claim input tax credit on commissions and brokers?

Yes. So we basically said we would do this on a selective basis. We have initiated chargebacks for a large part of our distribution for Unit-Linked products. And that is in line with what we had done for traditional products last year, after the new surrender value standards came in. Of course, there are still some ongoing conversations, but a large part of the conversations have been completed. There is no commission discount for the ULIP plans. If renewal premiums are not received, the commission paid in advance will be reclaimed. So there is no advance discount. But this allows everyone to focus on perseverance so that the renewal committees can continue into the second year, including the third year.