Standalone health insurers set to outpace general insurance growth in FY26, says India Ratings

Growth in standalone health insurance segment is expected to remain higher than the general insurance industry average in FY26.

India Ratings is pencilling 13% year-on-year growth in gross written premium of the general insurance segment in the current financial year compared to 8.5% reported a year ago. Premium growth led by value would be a larger contributor than new policyholder additions for the sector, it said.

But standalone health insurers players are expected to grow at 21% in FY26 compared to around 18% a year ago driven by rising health awareness post pandemic and medical inflation, the rating agency said.

Jinay Gala, director, India Ratings said that the industry saw a positive rub-off effect of government schemes like Ayushman Bharat, which helped increase health insurance penetration, but the individual side remained under insured.

“We see the growth rates would continue in this space looking at the way medical inflation is playing out. We have around 12 to 13% of a medical inflation and the kind of impact that can bring (on the individual saving could be humongous,” he said.

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India has seven standalone health insurance insurers (SAHI), including the listed Star Health Insurance.SAHI’s share in the overall gross domestic premium of general insurance rose to 41% in April-December of FY25 from 30% in FY20.Replying to a question related to Life Insurance Corporation of India’s proposed entry into the health insurance segment, Gala said that the move would be value accretive because the insurer has an agent-driven business, where existing networks can help cross sell different kinds of products. “It would also add competition for the sector but the key thing to note here is that this would largely help to drive the sector growth,” he said.

The rating agency also said that public sector insurers will continue to lag private players in terms of growth.

The growth is largely lagging for PSUs, mainly due to capital constraints along with lower operational efficiency, leading to negative operating leverage in underwriting and thus moderating internal accruals.

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