Star Health and Allied Insurance on Wednesday reported a 40% year-on-year decline in net profit to ₹128 crore for the third quarter, even as gross premium income rose 22% to ₹4,624 crore, aided by higher retail health insurance policy sales following the GST rate cut.
Total expenses, including commissions and claims payouts, increased 14% year-on-year to ₹4,375 crore in Q3FY26. Net commission expenditure rose to ₹682 crore from ₹503 crore a year earlier, while claims payouts increased 19% to ₹3,055 crore.
However, under Ind AS accounting principles, profit after tax jumped more than five-fold to ₹449 crore during the quarter. The insurer also reported an underwriting profit of ₹46 crore, compared with an underwriting loss of ₹79 crore in the year-ago period under the new accounting principle.
Premium Growth Drivers
Gross written premium (GWP) stood at ₹5,047 crore on a new-business basis, reflecting a 23% year-on-year increase. Retail GWP rose 27% to ₹4,838 crore, driven by a 60% surge in fresh retail premiums after the GST cut.
Insurance companies are required to follow Ind AS, India’s version of International Financial Reporting Standards (IFRS), from April 1, 2027.
“IFRS accounting presents a more accurate picture of insurers’ business,” said Nilesh Kambli, chief financial officer, Star Health and Allied Insurance. He explained that under the current Indian GAAP framework, insurers recognise premium income on a pro-rata basis over the policy term, while acquisition costs such as commissions are expensed upfront.
For example, on a one-year policy sold on October 1 with a premium of ₹100, only ₹25 is recognised as revenue by December 31, even as the full ₹30 commission paid to the agent is booked as an expense.
This results in a notional loss in the initial months, despite the policy being profitable over its full tenure. Under IFRS, both revenue and acquisition costs are spread over the policy period.
Investment Valuation Changes
Kambli added that under Indian GAAP, gains on equity investments are recognised only when the securities are sold. If an insurer purchases an equity security at ₹100 and its market value rises to ₹120, the ₹20 gain does not flow through the profit and loss account unless the investment is sold.
“This means long-term investors do not capture market movements in earnings, even when portfolio values improve,” he said.
Under IFRS, investments are marked to market, with unrealised gains and losses recognised in the revenue account. This allows insurers to reflect the true economic value of their investment portfolios. Star Health’s investment income surged 176% under IFRS to ₹569 crore during Q3FY26.
Fixed-income instruments account for 82% of the insurer’s investment portfolio, with equities making up the remainder. The company reported mark-to-market gains of ₹260 crore during the quarter.
Shares of Star Health closed 3% higher at ₹440 on NSE.