Will fully pass on the benefits of the GST rate cut to consumers: Sumit Madan of Axis Max Life Insurance

Axis Max Life Insurance posted a 27 per cent increase in value of new business (VNB) to ₹ 974 crore on an annual basis in the first half of this fiscal. What were the factors that contributed to this?

Our VNB growth is due to our product strategy. Protection remains a preferred segment for us. Our retail protection products helped us achieve the highest market share in the first half of FY26, with a 34 percent year-on-year growth rate in the pure protection category. Consequently, the retail protection and healthcare segment contributed 13 percent to total revenue, growing at 36 percent, supported by an attachment rate of 37 percent. Our annuity business grew by 85 percent in the first half and an exceptional 122 percent in the second quarter, driven by strong execution of both private and corporate annuity pools.

Our own channels (agencies, direct sales and e-commerce) remained a cornerstone of growth for us. On this strong basis, our offline owned channels recorded annualized premium equivalent (APE) growth of 26 percent in the second quarter of FY26, while online business grew by 14 percent, resulting in total owned channel growth of 22 percent during the quarter. Our partnership activities (bancassurance) also continued to gain popularity, supported by the scaling up of the partnerships built up over the past two years. These new banking and brokerage partnerships now collectively contribute approximately 5 percent of individual APE.

To what extent has the VAT exemption on life insurance policies impacted VNB growth for H1 FY26? What was its impact on the VNB margin?

While unavailability of input tax credits (ITC) may have a short-term impact on margins of approximately 0.6 percent, our margins have nevertheless improved by a strong 220 basis points in the first half of the year, from 21.2 percent in the first half of FY25 to 23.3 percent in the first half of FY26, and our VNB growth is at 27 percent.

For the first half of this financial year, what was the impact of the GST rate cuts on the company’s Embedded Value (EV)? What could be the impact over the entire year? What steps is the insurance company taking to negate the impact in the future?

The impact of the GST rate cuts on Embedded Value is approximately Rs 268 crore. However, this is a one-off impact and will remain the same throughout the year. While unavailability of tax credits may have an impact in the short term, we have decided to pass on the full benefit of the GST rate reduction to the consumers and will recoup the impact of the GST through our targeted initiatives such as distributor renegotiations, cost optimization and operational efficiencies.

Do you pass on the impact of the Value Added Tax (ITC) benefit to the distributors? Have you reduced commissions? What is the situation now?

We have decided to pass on the full benefit of the GST rate reduction to consumers and will recover the impact of the GST through various compensatory actions such as product mix improvements, cost optimization and ongoing negotiations with distributors and suppliers. These actions are still ongoing.

The protection segment is expected to be the biggest beneficiary of the GST rate cut. What kind of revenue growth has the company seen in this segment?

The biggest impact has been on term life insurance, which is currently growing at a run rate of more than 60 percent. We are closely monitoring the weekly data and the momentum has held up well so far. We view this as a medium to long-term opportunity for the term category, which has received a meaningful boost from the GST cut.

What is the company’s full year guidance for VNB margin for this fiscal?

Last fiscal year we reported a full year margin of 24 percent. This financial year, we recalibrated our product mix to make it more balanced and aligned with our long-term strategy, which was supported by our latest product launches. We have launched new propositions in various segments, including Savings, Protection and Ulip products for riders. This gives us reasonable confidence that we can meet our previous expectation of a new business margin of between 24 and 25 percent.