Life insurance companies are likely to experience a volume growth reset in 2027-28 as the industry braces for the implementation of new regulations by April 1 next year, according to Harshal Mehta, Vice President of Equity Research at Asian Market Securities."FY28 basically that will be the first year where you will see impact on growth actually for most of the names," Mehta noted, outlining a base case where volumes suffer a one-year reset before growth resumes.
With the October 30 deadline for draft regulation feedback now passed, final clarity on the regulatory framework is expected within the next two to three months. The Street is currently pricing in the likelihood that the draft guidelines will be implemented without meaningful dilution, keeping insurance stocks under pressure in the near term despite decent July-September quarter of 2026 earnings.

If the draft regulations are finalised in their current form, companies with superior expense management could capture market share. SBI Life Insurance Company and HDFC Life Insurance Company appear slightly better positioned to navigate the transition.
SBI Life management has already indicated a significant advantage in potential market share gains under the proposed regime. During the consultation period, life insurers and large distributors sought higher commission from regulators, particularly in the credit life segment which faces the biggest impact from the proposed changes.

Companies also sought parity on expense management limits, where certain firms previously enjoyed better thresholds. However, recent channel checks indicate that regulators are unlikely to meaningfully dilute the draft proposals before the anticipated April rollout.
On the distribution side, PB Fintech recently reported a 10%topline margin, marginally beating estimates. The PolicyBazaar parent is actively diversifying into non-insurance business lines to mitigate regulatory cost impacts and maintains multiple levers to manage the transition.

The company has engaged with regulators multiple times, hoping for a more favourable outcome in the final guidelines. Watch the full conversation hereThe stock has already corrected 40-45% from its peak, limiting further downside expectations. Even if the draft regulations are implemented as the final rules, the downside is capped."Further 10-15% correction could be possible in this name," Mehta explained.
"But as at this price, actually bulk of things are built in."Catch all the latest updates from the stock market here