Star Health Insurance, the country’s largest standalone health insurer, is witnessing a 25% increase in the average size of health insurance policies following the Goods and Services Tax (GST) rate cut, according to a senior company official.
“Before the GST change, the average sum assured of new policies was around ₹9 lakh and now it is close to ₹11 lakh. There has been a 20–25% increase,” Anand Roy, MD & CEO of Star Health Insurance, said on Monday on the sidelines of an event.
Roy said many customers are opting for higher coverage as the premium outgo has reduced. “If somebody was paying about ₹20,000 as premium earlier, the GST removal has reduced the outgo to roughly ₹17,000–₹18,000. Many customers are still willing to pay ₹20,000, but are opting for higher coverage instead.”
GST exemption on retail health insurance for individual policies
The government exempted GST on retail health insurance for individual policies, including family floaters, senior citizen plans, and reinsurance costs on September 22. Following the rate cut, the standalone health insurance industry reported 36–39% year-on-year growth in monthly premiums between October and December 2025.
In January, the seven standalone insurers reported a 24% rise in premiums to ₹4,528 crore. “Demand from new customers buying policies has gone up by almost 50% for the industry,” Roy said.
Loss of input tax credit (ITC),
On the loss of input tax credit (ITC), Roy said the company has spoken to all its distribution partners and embedded the ITC impact into distribution margins. “The non-distribution ITC expenses like our IT costs or outsourcing expenses have to be borne by the company. That is an impact on us,” he said, without quantifying the hit on ITC loss or the margin adjustments to distributors.
Star Health has the second-largest agency distribution force after Life Insurance Corporation of India, with about 8.5 lakh active agents. On high distribution costs flagged by regulators, Roy said the company is operating within the Expenses of Management guidelines laid down by the insurance regulator. Star Health reported a gross direct premium income of ₹14,231.26 crore till January, according to data from the General Insurance Council, and expects to close FY26 with about ₹20,000 crore in premiums.