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Economic Times

Health insurers bleed despite premium hikes

Mumbai: Loss ratios at frontline Indian health insurers are continuing to look less flattering as hospital bills and claims, fuelled by an estimated 14% inflation in medical-related costs, overshadow multiple increases in coverage premiums. The pace of increases in claims has run ahead of double-digit premium enhancements across government, group, and retail health portfolios. New India Assurance saw its incurred claims ratio deteriorate to 109% in Q1 FY26, up from 106% a year ago. The state-owned insurer raised premiums, but the losses only deepened. ADVERTISEMENT With a 10% cap on premium hikes for senior citizens and inflation at 14%, there is already a 4% gap, said Girija Subramanian, CMD, New India Assurance. Even after rate hikes, loss ratios have not improved and issue lies with service provider ecosystem, not underwriting, she told investors. ICICI Lombard reported a rise in the loss ratio in its retail health book from 72.5% to 74.3% in Q1. The insurer called it a Q1 phenomenon and expects to end the year in the loss ratio range of 65-70%. "There has been an increase in incidence," said Gopal Balachandran, CFO, ICICI Lombard. "But even when we started the last year, the Q1 number was 72.5%...ended the year at 67.9%." Star Health's incurred claims ratio climbed to 68.5% from 66.9%, while its overall loss ratio worsened to 69.5% from 68.1%. The health segment continues to dominate general insurance, accounting for 40.2% of industry gross premium income. "There is a catch as medical inflation is not uniform across the board," said Avinash Singh, senior research analyst, Emkay Global. "Each insurer faces a different inflation curve depending on its portfolio mix. PSUs, for example, have older policyholder cohorts in their retail book who require more tertiary care and this pushes their inflation-linked claims much higher than industry averages." Niva Bupa has seen loss ratio move up to 68% on retail book. "Broadly, our loss ratio has increased by around 300 basis points," said Krishnan Ramachandran, MD, Niva Bupa. "Key drivers are a shift in business mix-group health or B2B loss ratios are structurally higher than retail-and some uptick in retail losses." (You can now subscribe to our ETMarkets WhatsApp channel)