Niva Bupa Health Insurance’s average ticket size of policies increased by around 13 per cent year-on-year in the third quarter this fiscal, backed by GST exemption on individual health insurance premiums, says its Executive Director and Chief Financial Officer Vishwanath M. In an interaction with businessline, Vishwanath says the insurer has passed on the impact of GST input credit loss to its distributors uniformly across the board. Excerpts:
Niva Bupa Health Insurance’s gross written premium grew 55 per cent year-n-year to ₹2231 crore in the third quarter this fiscal. What drove this growth?
The reported 55 per cent growth needs to be read with context. From October 1, 2024, there was a change in accounting for multi-year policies. Earlier, for example for a two-year policy, the full premium used to get recognised upfront. Post the change, only half is recognised in the year of sale and the rest is deferred for next year. Because of this, the reported Q3 numbers include premium spill-over from last year, while earlier periods had spill-over going out. To give clarity, we have disclosed like-to-like numbers as well. On a like-to-like basis, total business grew 31 per cent, and retail business grew 43 per cent in Q3.
Retail growth accelerated sharply to 43 per cent in the third quarter from 28 per cent in the first half (H1) of this fiscal. Was it because of the GST exemption on individual health insurance premiums?
Yes, the biggest driver has been the GST reduction on retail health insurance. Demand picked up sharply across all channels. We saw growth both in the number of lives covered and average ticket size. The GST benefit clearly translated into stronger affordability, higher conversions, and more renewals. This acceleration is visible across agency, bancassurance, brokers, and digital channels. Consumers are using the savings to upgrade coverage rather than just buying cheaper policies. For example, customers who earlier bought ₹10 lakh cover are now opting for ₹15 lakh or more. Also, we are witnessing higher adoption of comprehensive coverage and richer benefits. Overall, average ticket size increased by around 13 per cent year-on-year in the third quarter. Normally, 7–8 per cent comes from inflation, so the incremental uplift is directly attributable to GST relief. This trend has continued into January, suggesting it is sustainable.
How much of this retail growth came from new customers versus existing customers upgrading?
Broadly, 40 per cent of retail business is new business, while 60 percent comes from renewals and upgrades. If I highlight one clear data point — on our own direct digital channel, new business grew 65–70 per cent y-o-y in Q3, reflecting higher traffic and better conversion driven by the GST relief.
Despite strong growth, the company reported an operating loss of ₹135.53 crore in Q3FY26 versus an operating profit in the same period of FY25. Why?
This again is an accounting timing issue. Because of the multi-year policy accounting change, gross written premium reflects growth immediately, but net earned premium lags. Claims, however, continue as usual. This optically depresses operating profit under Indian GAAP in the short term. To give a clearer picture, we have also published audited IFRS (Ind AS) numbers, which smoothen these timing differences. IFRS numbers showed that for the third quarter this fiscal the company registered a net profit of ₹77 crore compared to ₹60 crore for the corresponding period last fiscal. This includes a one-time ₹20 crore impact due to the new labour codes (gratuity and leave encashment). Even after this, profitability improved for the quarter.
The company’s Expenses of Management (EoM) ratio improved significantly. What were the factors that contributed to it?
There were two factors. Firstly, economies of scale — expenses are growing around 12–13 per cent, while business is growing around 30 per cent. The second factor is a realignment of distribution commission, including GST input credit adjustments. Our EoM ratio stands at 36.3 per cent for 9MFY26, versus a regulatory allowance of 35.9 per cent (including permitted add-ons). We are confident of being fully compliant for FY26.
Have your interactions with distributors to realign commission structure concluded, as insurance companies are now not able to claim input tax credit on commissions and brokerages?
Yes, we passed on the GST impact transparently. Commission percentages remain unchanged, but GST is now embedded. Despite this, distributor income has not declined because of higher volumes. For example 43 per cent retail growth in the third quarter is a testament to this. Absolute earnings for distributors continue to rise due to business growth.
