After Input Tax Credit Loss HDFC Life and ICICI Prudential Reset Distributor Terms

Both HDFC Life  and ICICI Prudential have revisited distributor economics following the removal of input tax credit (ITC) under the GST regime, with the former finalising new terms and the latter still in discussion, as per news reports. 

Distributor Negotiations Completed by HDFC Life 

HDFC Life reported that talks with all distributors, including its bancassurance partners, have concluded and the revised commercial structure is now in place.  

The changes were introduced mid quarter after the GST announcement in late September and are expected to reflect in the third quarter results, with a larger impact from the fourth quarter onward.  

Bancassurance accounts for over 60% of the insurer’s annualised premium equivalent (APE), with HDFC Bank providing the majority of that volume. 

Read More: LIC Q3FY26 Earnings Results To Be Declared On February 5, 2026! 

ICICI Prudential’s Ongoing Discussions 

ICICI Prudential indicated that negotiations are still underway, citing a diverse partner base that includes its parent bank. The insurer confirmed that the ITC loss has already been absorbed into the profit and loss statement and the value‑new‑business (VNB) figures.  

Any further benefit is expected to arise from commission rationalisation rather than reversal of the tax impact. 

Impact on Bancassurance Growth 

The heavy reliance on parent banks appears to have moderated bancassurance growth in the current fiscal year.  

HDFC Life recorded a 2% growth in bancassurance for the nine‑month period, while ICICI Prudential saw a 10.5 % year‑on‑year increase, contributing roughly 27 % to its APE.  

Protection products within the bancassurance channel have shown stronger growth, with HDFC Life reporting over 40% increase in protection sales in the same period. 

Strategic Focus on Value Over Volume 

Both insurers highlighted a strategic shift towards quality and value, opting to step back from non‑par opportunities that did not meet pricing or quality thresholds. HDFC Life is now tracking the counter share of VNB at key partners such as HDFC Bank rather than solely pursuing volume growth. 

Conclusion 

HDFC Life has finalised its distributor restructuring while ICICI Prudential continues negotiations, each adapting to the ITC loss caused by the GST change. The adjustments aim to align commercial terms with bancassurance partners and focus on value creation within the distribution network. 

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