India’s insurance industry is entering the new financial year with signs of recovery, according to Kotak’s report. Shares of private insurers dropped 7%–15% over the past three months, even as their underlying businesses strengthened.

Life insurers recorded first-quarter growth of 8%–36% in Annualised Premium Equivalent, or APE, a metric for measuring new business. Margins widened by 200–300 basis points, equivalent to 2–3 percentage points. Higher demand for term cover and traditional savings policies supported the improvement.

Health insurers also reported strong sales, with first-quarter new business rising 37%–41%. Star Health and Niva Bupa improved their combined ratios, which compare claims and operating expenses with premium income. A decline in this ratio indicates better control over these costs relative to premiums.

The GST exemption raised concerns because insurers could no longer claim input tax credits. However, companies passed tax savings on to policyholders, bringing down term insurance premiums and encouraging purchases despite the tax transition.

Kotak expects private life insurers to deliver mid-teen growth over the coming years, while LIC’s expansion could be more modest. For general insurers, potentially higher motor third-party claims remain a risk to watch.