Modi’s Big GST Reform Announcement: What It Means for Insurance and Your Money

On August 15, 2025, Prime Minister Narendra Modi announced sweeping reforms under the upcoming GST 2.0 framework, promising rationalization of tax slabs and relief to sectors that directly impact the middle class. One of the most discussed areas is insurance premiums, where consumers have long complained about the 18% GST burden.

This announcement comes at a crucial time, as the GST Council has already been deliberating on reducing GST rates for life and health insurance policies.

The Journey So Far: GST Council on Insurance Premiums

Earlier, during the 55th GST Council Meeting in December 2024, the agenda included proposals to lower or exempt GST on:

• Term insurance premiums (pure risk protection plans)

• Health insurance policies, especially those for senior citizens

• Policies with coverage up to ₹5 lakh

While no final decision was taken then, the Council entrusted a Group of Ministers (GoM) to study the impact. In 2025, deliberations continued, with the insurance regulator IRDAI also backing a rate cut.

As of today, the GST rate remains 18%, but strong political and industry signals suggest that relief is around the corner under GST 2.0.

India’s Insurance Market Leaders

Term & ULIP Insurance: LIC Dominates

When it comes to term insurance and ULIP (Unit Linked Insurance Plans), four companies dominate the Indian market:

• LIC (Life Insurance Corporation of India) – Market leader with ~69% share

• SBI Life Insurance – ~11% share

• HDFC Life Insurance – ~10% share

• ICICI Prudential Life Insurance – ~7% share

LIC continues to be the undisputed leader, especially in pure term and ULIP categories, given its reach and trust factor across India.

Health Insurance: Private Players Rising

Unlike life insurance, the health insurance market is more fragmented. As of FY 2025, here are the key listed players and their estimated market share:

• Star Health & Allied Insurance – 12%

• ICICI Lombard – 9%

• Bajaj Allianz General Insurance – 8%

• Go Digit Insurance – 6%

• HDFC Ergo – 6%

• Care Health – 4%

• Niva Bupa – 3%

Here, Star Health leads as the top standalone health insurer, but competition remains tight.

Why This Matters to You

• For Policyholders: A GST reduction from 18% to possibly 5% or lower could directly cut your annual premium cost on both health and term insurance.

• For Investors: Listed insurers like LIC, SBI Life, HDFC Life, Star Health, and ICICI Lombard may see higher demand post-reform, impacting their short term trading calls as well as long term trading calls.

• For Analysts: At AG Analyst, we closely monitor such policy reforms because they affect not just the insurance sector, but also overall market sentiment.

Final Word

PM Modi’s GST 2.0 reforms may finally bring long-awaited relief for crores of Indian families paying steep premiums. With LIC dominating term and ULIP insurance, and Star Health leading in the health insurance space, these companies could become the biggest beneficiaries once the GST cut is formalized.

For investors and traders, this is the right time to stay alert — as reforms like these often translate into powerful opportunities for both short term trading calls and long term investment calls.

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