Nilesh Kambli, Chief Financial Officer, Star Health and Allied Insurance
| Photo Credit:
Sai Krithi R _12401
The Union Budget 2026–27 has accorded utmost importance to the health sector by enhancing budgetary allocations, proposing major initiatives and programmes, and exempting basic customs duty on cancer drugs. How would non-life insurance companies benefit from these measures?
The important thing is Finance Minister Nirmala Sitharaman acknowledging the fact that there is inflation in the market. She has proposed the Biopharma SHAKTI with an outlay of ₹10,000 crore, which will have an ultimate impact of reducing the cost of pharmacy in the country. This is a welcome move. Reducing custom duty on 17 drugs, which are cancer related, is a positive for the insurance industry, because it reduces the cost of claims for us. All these initiatives will help us in terms of our claims ratio and pricing that we do to the customers. Today, the pricing of insurance is based on the claims cost. The Government’s measures will improve the affordability and availability of health insurance further.
Star Health and Allied Insurance’s Expenses of Management (EoM) ratio rose 211 basis points year-on-year at 33.95 per cent for the third quarter this fiscal. Why did it increase? What is the outlook for FY26-end?
The regulatory limit is 35 per cent. So, we are well within the limit. Firstly, the GST input tax credit loss, which happened. From September 22 onwards, we don’t get the GST input tax credit. One part of it is related to our intermediaries, agents, brokers, corporate agents– we are able to pass it on to them. Whatever payments we are doing are inclusive of GST. But our own operational expenditure, in terms of our IT expenses, rent, electricity, all those things we have to pay GST. So that is an additional impact which has come for this three-and-a-half months period. That is an additional burden of around Rs 65-70 crore for the GST purposes. Secondly, when we are writing long-term businesses like three-year retail health policies, selectively for good agents, we are paying some commission which is upfront. So, while the GWP (Gross Written Premium) is only 1/3 for a three-year policy, the commission payment that we are doing is recorded upfront in the books of accounts. And we are doing it consciously, because we are operating well within the 35 per cent EoM targets. Moreover, these are good businesses and we want to promote good agents.
In the fourth quarter, generally, around 35 per cent of the business happens. So we should be well within the IRDAI limits for the Expenses of Management. We should not have a problem.
In the third quarter, how did the GST exemption on individual health premium help the company grow its retail health segment? How much did the average ticket size increase?
In retail health insurance, in the fresh business (by new customer acquisition) we have a 60 per cent growth with a 23 per cent growth in volume compared to last fiscal. And, on an overall retail health basis (fresh plus renewal), we were at 27 per cent growth in terms of GWP for Q3FY26. This growth was largely contributed by the GST exemption. When you look at the average ticket size compared to last financial year, we saw an 11-12 per cent increase in the third quarter. The average ticket size of policies stands at around Rs 22,000 as against around Rs 20,000 in the year-ago period.
In the post-earnings call, the management said the company’s market share in the retail health segment was 31.3 per cent for the nine months of FY26. What was the year-on-year change? How would the company like to grow this market share further in the next two-three years?
In the year-ago period our market share stood at 32.2 per cent. So, we have lost market share by around 1 per cent year-on-year. We are working with strict underwriting guidelines. We are working with the philosophy of growth with profitability. So, wherever we believe that these are loss making locations, where we see that the impact of fraud, waste and abuse is higher, we are reducing the business. In some parts of Delhi and some parts of Gujarat, we have been actually shrinking our business. And that is by design. Where we see that the profitability is not there, we are happy to let go of market share. That is how we are approaching the business.
The company is a market leader in the retail health insurance segment. Where do you see that it will be able to grow the business further going ahead?
We see that the North-East region is under penetrated. We want to ensure we do good growth in that region. Also, a large part of the semi-urban and rural markets will continue to be under penetrated– in the Southern territories and Eastern territories. We believe there is a good opportunity for growth in these areas. Typically, for us, around 50 per cent of the businesses comes from semi-urban and rural areas. And, we are improving our penetration in these locations.
Published on February 2, 2026
