Advertising and public event expenses for life insurance companies decreased in the fiscal year 2025-2026 (FY26) compared to the previous year (FY25). This reduction was driven by lower expenditures from private life insurance companies.
Reasons for Cost Reduction
According to experts, private insurance companies reduced their spending after the removal of Goods and Services Tax (GST) for individual term insurance. This measure contributed to segment growth in the second half of the year and followed a restructuring caused by the loss of Input Tax Credit (ITC) benefits.
Financial Figures
Data analyzed from public reports of life insurance companies shows that advertising and public event expenses fell by 19.8 percent, amounting to 3,196 crore rupees in FY26, compared to 3,988.04 crore rupees in FY25. Among this overall decrease, the expenses of private life insurance companies dropped to 2,512.8 crore rupees from 3,436 crore rupees in FY25. Meanwhile, the expenses of the Life Insurance Corporation of India (LIC) increased to 683 crore rupees from 551.8 crore rupees.
Impact of GST Changes
In September, the government reduced the GST on retail life and health insurance policies from 18 percent to zero. Consequently, insurance companies reported a significant increase in sales of individual life insurance policies. However, companies also lost the benefit of Input Tax Credit (ITC), which was subsequently passed on to their distribution partners, company representatives stated.
Expense Management Strategy
A senior executive at one of the life insurance companies noted: 'The GST change led to business growth in the second half of FY26 due to increased awareness. Furthermore, it resulted in losses related to ITC, forcing insurance companies to revise their expense strategy to protect the target metric of Expense to Margin (EoM). In the case of LIC, since it has a larger share in group business, it may not have needed to reduce these expenses.'
Examples of Cost Reduction
Major private market players, such as HDFC Life, reduced their advertising expenses to nearly 498 crore rupees from 1,042 crore rupees in FY25. ICICI Prudential Life Insurance expenses also decreased to 252.5 crore rupees from 520 crore rupees. Additionally, advertising and public event expenses for SBI Life Insurance were reduced to 196.6 crore rupees from 238 crore rupees. At the same time, Axis Max Life Insurance expenses rose to 551.8 crore rupees from 502.4 crore rupees, while Bajaj Life Insurance advertising expenses fell to 322.4 crore rupees from 392.6 crore rupees.
Analysts' Views on the Market
Aniruddha Marathe, Managing Director and Partner at BCG, expressed a similar view, stating that 'overall, the life insurance industry is facing cost pressure due to the need to achieve EoM targets, which may have led to these expense reductions. Also, the removal of GST on life and retail health policies meant that these costs were absorbed by the insurance companies within their operating expenses.'
Furthermore, the analyst noted that life insurance companies have been gradually reducing their advertising and public event expenses over the past few years, which may also be linked to the constant rise in commission-related costs, which are the largest expense item for life insurers.