Star Health and Allied Insurance recorded an 11% increase in its retail policy base after the government removed the 18% GST on health premiums. While the tax relief is driving higher coverage choices among younger buyers, investors are also tracking how the company manages operational costs and reputation following a major data breach in 2024.
Star Health and Allied Insurance has reported an 11% expansion in its retail policy base following the government's decision to remove the 18% Goods and Services Tax on individual health insurance premiums. This tax change, which took effect in September 2025, has lowered the entry cost for many households, leading to a noticeable shift in consumer demand.
Alongside the increase in the number of policies, the average sum insured on new retail indemnity plans has risen by about ₹1.4 lakh, reaching an average of ₹13.7 lakh. This suggests that when the cost of buying insurance drops, customers are choosing to purchase more comprehensive financial protection rather than just keeping their old coverage levels.
Demographic trends show that individuals between the ages of 26 and 50 now make up over 80% of the new policy additions. This younger group is increasingly treating health insurance as a long-term financial necessity. Additionally, the company has reported deeper penetration into Tier II, III, and IV cities, as insurers expand their distribution networks to align with the national objective of providing universal health insurance coverage by 2047.
However, investors should consider that top-line growth is only one part of the business picture. The company has faced significant reputational and operational challenges, most notably a large-scale data breach reported in 2024. This event drew intense regulatory scrutiny and forced the firm to increase its focus and spending on cybersecurity to rebuild customer trust. For shareholders, the key monitorable remains whether the company can sustain this growth in policy volume without incurring higher costs related to IT security or facing further churn in its customer base due to past security concerns.
Competition in the sector is also rising. As the government pushes for broader health security, both traditional insurance providers and life insurance companies are expanding their health offerings. Star Health will need to balance this growth in new policies with the need for strong customer retention and efficient claim management. The Insurance Regulatory and Development Authority continues to monitor sector-wide performance, and future updates on industry trends will provide more context on whether this growth pattern is consistent across the market.