Life insurers trim advertising spend by 20% in FY26 amid cost pressures | Insurance News
The advertising and publicity expenses of life insurance companies declined in the financial year 2025-26 (FY26) compared with the previous year (FY25), owing to a drop in such expenditure by private life insurers. According to experts, private life insurers cut spending following the Goods and Services Tax (GST) exemption on individual term insurance, which led to growth in the segment in the second half of the year, as well as restructuring following the loss of input tax credit (ITC).
According to data analysed from the public disclosures of life insurers, advertisement and publicity expenses dropped 19.8 per cent to Rs 3,196 crore in FY26 from Rs 3,988.04 crore in FY25. Of this, private life insurers’ expenses fell to Rs 2,512.8 crore from Rs 3,436 crore in FY25, while state-owned Life Insurance Corporation of India’s (LIC’s) expenses rose to Rs 683 crore from Rs 551.8 crore.
In September, the government slashed GST on retail life and health insurance policies from 18 per cent to nil. Consequently, insurance companies reported a healthy increase in sales of individual life insurance policies. However, at the same time, insurance companies also lost the benefit of input tax credit (ITC), which was later passed on to their distribution partners, companies said.
“Change in GST led to growth in business in H2FY26 due to increased awareness. Also, this led to ITC-related losses, due to which insurance companies had to revise their spending strategy in order to protect their Expenses of Management (EoM) target. In the case of LIC, it has a larger share in group business and might not have felt the need to reduce these expenses,” a senior executive at a life insurance company said.
Leading private insurance players such as HDFC Life reduced their advertising expenses to nearly Rs 498 crore from Rs 1,042 crore in FY25. ICICI Prudential Life Insurance’s expenses also dropped to Rs 252.5 crore from Rs 520 crore.
SBI Life Insurance’s advertisement and publicity expenses declined to Rs 196.6 crore from Rs 238 crore. Axis Max Life Insurance’s expenses rose to Rs 551.8 crore from Rs 502.4 crore, while Bajaj Life Insurance’s advertising expenses fell to Rs 322.4 crore from Rs 392.6 crore.
Voicing a similar opinion, Aniruddha Marathe, managing director and partner, BCG, said, “Generally, the life insurance industry is facing cost pressure due to meeting Expenses of Management (EoM) targets, which might have led to the drop in these costs, and also the removal of GST on life and retail health policies, which has led to these costs being absorbed by the insurance companies in their operating expenses.”
Furthermore, life insurance companies have been gradually reducing their advertisement and publicity expenses over the past few years, which, according to an analyst, could also be attributed to the persistent rise in commission-related expenses, the largest expense for life insurers.
