9 months ago
Star Health CFO: GST Exemption Boosts Sum Assured, Affordability
Imagine health insurance got a discount, like when a store lowers the price of something!
The government took off a tax called GST from health insurance, making it cheaper.
Because it's cheaper, more new people are buying it, and people who already have insurance are choosing to get more coverage.
They are also buying extra benefits, like adding more coverage for specific things.
This is making the average amount people spend on insurance go up.
The insurance company is happy about this and expects more people to buy insurance and choose higher coverage.
They are also focusing on making sure the company makes money, not just selling a lot of policies.
They decided that agents who sell insurance will pay the tax on their commission, while the insurance company pays the tax on things like computers and rent.
Star Health experienced over 50% premium growth in October and 30-35% in November following GST exemption on retail health insurance.
Existing policyholders are increasing their sum assured and add-on covers due to the reduced cost of insurance.
The average ticket size for Star Health is projected to reach ₹20,000 by the end of the fiscal year, up from ₹19,000-₹19,500 in H1FY26.
Intermediaries will bear the 18% GST on their commissions, while insurance companies will cover GST on operating expenses like IT and rent.
Star Health maintains a market share of around 32% in the retail health insurance segment and prioritizes profitability over aggressive market share expansion.
- Who
- Star Health and Allied Insurance
- What
- Witnessing increased new customer acquisition and existing policyholders opting for higher sum assured and add-on covers due to GST exemption on retail health insurance.
- Where
- India
- When
- Since October, with continued momentum in November and a projected fiscal-end outlook.
- Why
- The 18% GST exemption has made health insurance products more affordable, leading to increased demand and a willingness among policyholders to increase their coverage.
Insurance Company Perspective
Intermediary Perspective
GST Impact on Commissions
Insurance Company Perspective
Star Health and other insurance companies will bear the 18% GST cost on operating expenses like IT, rent, and courier, but decided that commission paid to agents, brokers, and corporate agents will be exclusive of GST, meaning intermediaries will bear this cost.
Intermediary Perspective
The decision for intermediaries to bear the 18% GST on commissions is a direct financial burden placed upon them due to the industry's pressure on expenses of management.
Key facts
- Company
- Star Health and Allied Insurance
- CFO
- Nilesh Kambli
- Impact of GST Exemption
- 18% reduction on retail health insurance premiums
- October Premium Growth
- Over 50%
- October Customer Growth
- 25%
- November Premium Growth
- Over 30-35%
- Average Ticket Size (H1FY26)
- ₹19,000 - ₹19,500
- Projected Average Ticket Size (FY End)
- Around ₹20,000
- Retail Market Share (H1FY26)
- Around 32%
Quotes
Nilesh Kambli
Chief Financial Officer of Star Health and Allied Insurance
“There is a positive improvement in this area .And, when you talk about higher sum assured and higher add on covers, it is a definite improvement in the average ticket size of the customers.”
thehindubusinessline.com
“If you focus only on the market share, you have to do business in certain loss-making territories, certain loss making geographies, which we don’t want to do.”
thehindubusinessline.com
Star Health and Allied Insurance
Star Health and Allied Insurance (industry level decision)
“For intermediary commissions to agents, brokers and corporate agents, we, at the industry level, or as a major SAHI (Standalone Health Insurance) player or GI (General Insurance) player, have decided that the commission paid to the intermediaries will be exclusive of GST.”
thehindubusinessline.com
“So the 18 per cent cost will be borne by the intermediaries.”
thehindubusinessline.com
