Star Health Q1 FY27: Underwriting turns stronger as proprietary distribution scales

Star Health and Allied Insurance Company delivered a stronger underwriting quarter in Q1 FY27 (quarter ended June 30, 2026), while maintaining solid growth in its retail franchise. On a reported 1/N basis, gross written premium was INR 4,287 crore, up 19% year on year. Profit after tax rose 25% YoY to INR 550 crore, supported by both underwriting improvement and higher investment income.

What stood out in the quarter was the continued shift in operating quality. The company reported a Combined Insurance Service Ratio (CISR) of 97.0% versus 98.7% in Q1 FY26. Underwriting result expanded to INR 111 crore from INR 16 crore a year ago, reflecting a better loss ratio and a modest improvement in expense ratio.

Growth: retail fresh accelerates, new-to-insurance remains high

Retail fresh momentum remained strong. Retail fresh GWP (reported 1/N basis) increased 37% YoY to INR 730 crore. Management highlighted that 94% of fresh retail business in Q1 FY27 was new-to-insurance, compared with 90% in Q1 FY26, indicating that growth is being driven by first-time buyers rather than only churn within the insured pool.

The company also reiterated that it tracks business on both 1/N and N basis, with management noting that clean comparability across the two bases will be restored only by FY28 due to long-term policy reporting dynamics.

Underwriting: fourth successive quarter of improvement

Star Health positioned the quarter as a continuation of its underwriting turnaround. Management described the quarter as the fourth successive quarter of improvement in core underwriting profitability. The financials support that narrative: insurance service result improved to INR 425 crore from INR 288 crore in Q1 FY26, while CISR improved to 97.0%.

The loss ratio declined to 67.5% from 68.5% in the comparable quarter. Management attributed the improving loss ratio trend to a combination of actions taken over the past 18 months to two years: tighter portfolio selection by segment and geography, risk-based pricing with a steady cadence, stronger claims governance, and continued focus on fraud, waste and abuse mitigation. It also reiterated that Q2 is typically seasonally higher for claims due to infectious and vector-borne diseases.

On pricing, the company said repricing is executed through a planned actuarial calendar, with much of the recent pricing action taken in Q4 over the last couple of years, and the earned premium impact flowing into subsequent quarters.

Distribution moat: agency scale plus fast-growing D2C

Distribution remains central to the company’s strategy. Star Health stated that proprietary channels, agency and digital D2C, contributed over 90% of overall retail business. The agency channel continues to scale, with total agents reaching 8.5 lakh and 20,000 additions in Q1 FY27. Agent productivity improved to INR 1.5 lakh (retail health GWP per active agent) from INR 1.2 lakh in Q1 FY26.

Digital D2C is expanding from a smaller base but with rapid growth. D2C retail fresh GWP increased to INR 115 crore from INR 48 crore, representing 142% growth. Within overall digital fresh business, 74% was attributed to D2C, with 26% from digital partners.

The company also emphasized geographic breadth, stating that non-metro geographies contributed over 60% of fresh business. Management added that fresh business growth in non-metros was 3.5 times that of metros, consistent with its stated objective of deepening penetration where health insurance remains underrepresented.

Technology and claims: higher platform adoption, improving service metrics

Operationally, Star Health continues to embed technology across distribution, customers and claims. It reported that 91% of claims were processed through the new claims platform as at the close of Q1 FY27. The company highlighted initiatives such as document digitisation, AI-driven fraud detection, and the use of generative AI in claims processing.

Customer service metrics improved as well. Retail claims settlement ratio was reported at 91.2% for Q1 FY27, an improvement of 1% YoY. The renewal ratio increased to 102% from 99%, and company NPS improved to 65 from 53.

On the investment side, total investment assets increased to INR 21,893 crore as of June 30, 2026 from INR 18,631 crore as of June 30, 2025. Investment income rose to INR 644 crore in Q1 FY27, including a mark-to-market gain of INR 296 crore for the quarter. The company also reported a normalised PAT framework at an 8% yield to reduce reliance on mark-to-market movements when assessing profitability.

Takeaways

Q1 FY27 reinforced Star Health’s stated theme of sustainable growth with improving underwriting. The quarter delivered stronger underwriting result and a lower CISR, while retail fresh growth remained robust and heavily new-to-insurance. Management stayed cautious on seasonality and avoided precise loss ratio guidance, but reiterated its intention to move toward a mid- to high-teen ROE over time. The combination of proprietary distribution scale, data-led underwriting, and increasing digital adoption remains the core strategic throughline for the company.