GST Relief Boosts Insurance Demand in 2025, But 2026 Faces Cost Pressures

• India's insurance sector saw steady premium growth in 2025, driven by GST removal on individual life and health premiums, boosting affordability and demand.
• Despite increased demand, insurers faced margin pressure from rising medical inflation, intense competition, and internal cost challenges due to lost input tax credits.
• Regulatory reforms by IRDAI focused on customer-centricity, inclusivity (senior citizens), and product innovation, simplifying policies and expanding access.
• Digital transformation accelerated with mainstream digital onboarding, AI for fraud detection, and embedded insurance scaling up through partnerships.
• Outlook for 2026 includes growth opportunities via Gen-AI, Bima Sugam, and wellness products, but risks like medical inflation and climate events persist.

Why It Matters: 2025 saw insurance demand rise due to GST relief, but 2026 faces challenges from rising costs and competition.