Star Health and Allied Insurance Co Ltd (NSE: STARHEALTH) Q1 2026 Earnings Call dated Jul. 30, 2025
Corporate Participants:
Unidentified Speaker
Anand Roy — Managing Director & Chief Executive Officer
Amitabh Jain — Chief Operating Officer
Himanshu Walia — Chief Marketing Officer
Nilesh Kambli — Chief Financial Officer
Aneesh Srivastava — Chief Investment Officer
Aditya Biyani — Chief Strategy & Investor Relations Officer
Analysts:
Unidentified Participant
Devyanshi Dave — Analyst
Shreya Shivani — Analyst
Madhukar Ladha — Analyst
Dipanjan Ghosh — Analyst
Avinash Singh — Analyst
Aditi Joshi — Analyst
Sanketh Godha — Analyst
Swarnabh Mukherjee — Analyst
Prayesh Jain — Analyst
Nischint Chawathe — Analyst
Nidhesh Jain — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Star Health and Allied Insurance Co. Ltd. Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Devyanshi Dawe from AD Factors PR Investor Relations team. Thank you. And over to you, Ms. Devyanshi Devai.
Devyanshi Dave — Analyst
Good morning everyone. From the senior management, we have with us Mr. Anand Roy, Managing Director and Chief Executive Officer, Mr. Amitabh Jain, Chief Operating Officer, Mr. Himanshu Walia, Chief Marketing Officer Mr. Nilesh Kamli, Chief Financial Officer, Mr. Anish Srivastava, Chief Investment Officer and Mr. Aditya Diani, Chief Strategy and Investor Relations Officer. Before we begin the conference call, I would like to mention that some of the statements made during the course of today’s call may be forward looking in nature including both related to the future financial and operating performances, benefits and synergies of the company’s strategies, future opportunities and growth of the market of the company services.
Further, I would like to mention that some of the statements made in today’s conference call may involve risks and uncertainties. Thank you. And over to you Mr. Roy.
Anand Roy — Managing Director & Chief Executive Officer
Thank you so much and a very good morning to everyone. Thank you for joining us for Starheld’s earnings call for the first quarter of FY26. Over the past two years during my tenure as the CEO, our strategy has been grounded in four fundamental pillars. A risk first approach, customer centricity, a digital first mindset and a steady ROE focus. All the measures that we have been implementing in the pursuit of long term, sustainable and profitable growth are now raising results. The key pillars of the strategy has been emphasis on businesses and geographies and channels that meet our ROE thresholds.
Our focus on improving claims and customer experience. Various initiatives that we have taken are demonstrating better NPA strengths, product innovation and shift towards risk based pricing with prudent underwriting. Products such as Superstar and Health Assured incorporate innovative features and have been very well received in the market. They constitute nearly 80% of our new business now. Our Superstar product is probably the first product in the industry to cross 1000 crores of GWP within 10 months. Initiatives such as discount based on claims experiences shift to zonal pricing from Pan India Pricing. These are all a marked shift in our pricing strategy to ensure that we select and price risk appropriately.
We would also like to reiterate here that our long term competitive modes remain very much intact. We have the widest agency led distribution with our agency base now at 7.89 lakhs which is two heads of the next largest competitor. Our diversified distribution mix with our direct digital channel is now growing the fastest at 73%. On new business we have more than 11,300 crores agreed network hospitals which are supported by better negotiated pricing. Our lowest claims processing cost in the industry, less than a percent of our GWP also holds us in good stead in terms of our competitive advantage.
And finally the IFRS expense ratios have also reduced by 100 basis points to 30.1% from 31.1% the previous year. I would like to reiterate here. For the last two years we have been reporting annual IFRS numbers. As mentioned in our last call, we are moving towards quarterly IFRS reporting as the latest IRDI guidelines proudly IFRS is expected to go live by the 1st of April 2027. We would like to emphasize that all our business and investment related decisions are nowadays taken considering the IFRS reporting only. We have closed Q1FY26 with a gross continuum of INR 3,936 crores, a 13% year on year growth over the previous quarter.
These numbers are on n basis. There are multiple reporting standards now so we are for ease of understanding we are reporting our premiums on n basis. Our retail Health GWP grew 18% to INR 3,667 crores in Q1FY26 fueled by a 25% growth in fresh retail premiums and a strong renewal persistency of 98% on premiums. Despite our very large base, we have successfully maintained our market share in retail health at 31% which now contributes to retail now contributes to 94% of our overall portfolio which used to be 90%. In the last years retail fresh no fees grew by 8%.
Overall no fees grew by 5%. Reaffirming our strategy to drive business through both value and volume led growth. We closed Q1FY26 with an IFRS spat of 438 crores marking a 44% y o y increase over the last quarter of the last financial year. Our net incurred claim ratio for quarter one stood at 69.5%. We will now cover the highlights on the strategy of our various channels and the steps we have taken for improving outcomes. And finally we will Close with an overview of the key financial metrics for this quarter. The growth updates of our various channels are on end basis for ease of understanding.
Our agency channel which is the largest channel for us, contributed 82% of our overall GWP with both fresh and overall growth standing at 16%. The agency Fresh growth comes despite a very low share of portability business which we have maintained as a conscious decision in pursuit of quality growth. Our portability share is around 10% only. At Q1FY26 we added 14,000 new agents taking our total agency base to 7.89 lakhs which is the largest in the industry and agency productivity also improved by 13% 13 our preferred geographies are now growing at 1.5 times faster than the overall business.
These different geographies obviously demonstrate better roes and that’s why we are focusing on these areas. Our digital business now contributes around 20% of our new business versus 12% in the last year first quarter. Our digital business new fresh business is growing at an interest rate of 73%. We witnessed a 75% year on year growth in brand search volumes in quarter one, a clear reflection of the rising brand equity of Star Health Insurance. Additionally, our organic rankings for long tail keywords has also improved by 75% significantly enhancing visibility among highly intent customer segments. These gains have enabled us to meaningfully increase our digital leads.
The quality and performance of the digital business is very promising and we plan to create a digital SDU to accelerate this business. Digital details of this will be shared in due course. Our bank assurance channel contributed 7% to overall GWP in quarter one of FY26. We have made significant shift towards our preferred product offerings which is basically retail and benefit plans which contributes now 92% of our fresh business versus 74% last year. With this improved mix in business, we emphasize that bankta margins will improve in the coming quarters. Our corporate business channel contributed 2% of our mix.
This is in continuation of our strategic decision to focus on profitable SME segments which now contributes 65% of our corporate channel versus 40% in the previous year. In the corporate group segment, as we have communicated earlier, we decided to exit from large corporates and coinsurance segments including both large and mid sized group accounts which were not viable. A few updates on the Claims the industry continues to witness very high healthcare cost escalation. In the recent years we have seen claim ratios increase across industry players forcing health insurance industry players to pass on a portion of this inflation to the end customers.
On the ATF side we have implemented pricing corrections covering nearly 65% of our book in the last fiscal year. This will be followed by an annual repricing strategy which we have communicated earlier as well. On the group and bad customer side, we implemented price corrections in some of our low profitability accounts. Our vigilant and in house fraud detection models which are provided to StarHealth have delivered great value. We continue to invest in our efforts to reduce fraud, waste and abuse. Our FWA savings improved by 30% in the first quarter of FY26 over the last year.
Star Health Claims NPS has improved consistently over the last quarters. We now have a claims NPs of 57 from 46 in the last year of the same quarter. Our claims settlement ratio also now stands at 90% versus 85.7% in the first quarter of last financial year. Some of the key financial metrics for the quarter was under IFRS reporting standards. Our combined ratio for quarter one FY26 stood a 99.6% compared to 99.2% in the last year. Our claims ratio stood at 69.5% in Q1 compared to 68.1% in Q1 of last year. Our retail loss ratio stands at 68.5% and group loss ratio stands at 85.1%.
The investment income in quarter one of FY26 has grown to 586 crores versus 388 crores in quarter one of FY25. We accounted for 292 crores of mark to market gains in our investment income under IFRS accounting. Please note that the mark to market gains has been applied only to non debt portfolios which is now 17.5% of our investment book. On the debt book our MTM gains for the quarter is around 200 crores which is not considered under IFRS reporting. Our PAT for Q1FY26 stood at 438 crores compared to 304 crores in Q1 of FY25. Our return on equity non annualized for quarter one stood at 4.9% versus 3.8% of quarter one of last financial year.
Our solvency as on June 30th of 2025 was 2.22 times versus the 1.5 times minimum requirement. On the management side, I’m happy to announce and extremely pleased to welcome Mr. Rajiv Khale, former Commerce Secretary as the new Chairperson of our board. Mr. Khale’s extensive experience in public policy and governance will bring invaluable support and guidance to our business. This appointment further reinforces our commitment to strong corporate governance. In addition to Mr. K’s appointment, I am very thrilled to announce the elevation of my colleagues, Mr. Amitabh Jain, our COO, and Mr. Himanshu Walia, our CMO, to the board as Executive Directors, of course, subject to regulatory approvals, they have been instrumental in steering this company handling various business functions over the last few years.
I again thank you all for your continued trust in Star Health Insurance. With that, I am happy to now open the floor for your questions. Thank you very much.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one to ask on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shreya Shivani from clsa. Please go ahead.
Shreya Shivani
Yes, thank you for the opportunity. I have three questions. Sorry I missed the part on fresh and renewal growth. Did you see 98% persistency in renewal in retail business? Can you give the breakup of your premium growth into fresh and renewal Once again my second question is on reinsurance treaty. It seems like your reinsurance seeded is down to 4%. So this number has been quite volatile over the past couple of quarters. So can you help us understand what is the new treaty that started from this quarter? Because probably this is one of the reasons why your commission expense has also been slightly higher.
And my last question is basis your public disclosure data. It’s on your claim rejection ratio that I was seeing. So there has been quite a significant improvement over there. It’s down to about 11% on volume basis in FY25. I don’t have the 1Q26 numbers. So can you help us with 1Q26 and how much more improvement can possibly come over here? Because while you guys have improved this is still slightly higher than some of the other players in the industry. So these are my three questions. Thank you.
Anand Roy
Thanks Shivani. Let me just reiterate, the new business has grown in retail for us by 25% on an end basis and our GWP persistency is 98% on value basis as you rightly put it. So we continue to have a very strong performance on new business and we hope to maintain this momentum in the months forward as well. As far as our claims rejections are concerned See as a principal we have been always quite clear that all genuine claims will be paid and we have been doing that. Our business mix is quite different from rest of the players in the industry.
So we are a 95% retail oriented business which has its terms and conditions which is different. So we are continuing to see good traction in our claim settlement ratios and also our rejection rates are going down and we hope to improve as we go forward with the multiple measures we are taking. As far as the reinsurance is concerned that largely the obligatory session that is available right now. We used to have a treaty last year which we have exited. Nilesh, you want to add anything more?
Nilesh Kambli
Yeah. So Shreya, long term treaty basically now the reporting is on one by n basis. We have not reduced a long term treaty. But here again, you know I would like to reiterate that that is where IFRS becomes important because with N1 by and reporting the last results are not comparable to the current year. That’s the reason we have moved to ifrs. And this is where both the commission paid and the regional commissions are based on the policy period basis. All the decisions that we are taking are based on IFRS financials.
Shreya Shivani
Yeah, okay, okay, I understood. So, so the on the long term policies we don’t have any reinsurance treaty. It’s only the only obligatory part. Is there. Is that the correct way to understand this? Only the obligatory 4, 5%. Okay. Okay. Yeah, yeah. Okay. Thank you. This answers my question. Thank you and all the best.
operator
Thank you. The next question is from the line of Mother Karlada from Nuama Wealth Management Ltd. Please go ahead.
Madhukar Ladha
Hi sir, thank you for taking my question. So our loss ratios continue to sort of remain elevated despite, you know, we’ve taken a lot of price corrections on the retail portfolio yet on a year over year basis. Also our claim ratio continues to be on the higher side. So I wanted to get some sense of is there any sort of abnormality in this quarter or are we being more on the conservative side given what we saw last year happen over here? Second question on the digital side. How much of the business that you’ve acquired is through your own digital channel and how much is it from partners like policy wizard etc.
And third, you know, our underwriting profit under IFRS is lower than our than our IGAAP underwriting profit. Is that mainly because in the previous quarter we’ve written a lot of business and the amortization of acquisition cost is happening right now? Yes, these would be my three questions. Thanks.
Anand Roy
Thanks. And as far as the loss ratios are concerned. Let me answer that. You know, if you look at the trend in all loss ratios, we are seeing some improvements quarter on quarter. But all the measures that we have taken in terms of our price corrections, in terms of our underwriting strategies and also in terms of recalibrating certain businesses that probably there were some mistakes in the past, which is which we are exited. So I think these are the corrections that will flow over a period of time into the books. And I am very, very confident that loss ratios will improve going forward.
But having said that, the focus of the business is not only on the loss ratios, but also to grow profitably and also to ensure that the customer experience becomes better and better. So I hope that we will be able to deliver all the three areas consistently. To answer your second question, on the share of business between Digital Direct and partners, it’s around 70, 30. 70% of our business is digital direct and 30% is coming through our partners. And as far as the underwriting profits are concerned, you are right. I mean, you kind of answered the question.
The growth of business, new business, which has been demonstrated in the last few quarters will flow into the earned premiums in the quarters ahead. And definitely the underwriting profits should get better. So it’s a function of both the earth premium growth as well as the improvement in loss ratios which will help us improve our underwriting profits.
Madhukar Ladha
Okay, that’s it. From my side. All the best. Thank you.
Anand Roy
Thank you.
operator
Thank you. The next question is from the line of Dipan Chand Ghosh from Citibank. Please go ahead.
Dipanjan Ghosh
Hello. Am I audible?
operator
Yes,
Dipanjan Ghosh
yes. So just three questions from my side. You know, first, in terms of the persistency number that you have given, would it be possible to give some clarity of the persistency across customer behavior or cohorts for the segments where you have taken price hikes over the past six to nine months? You know, just wanted to get a sense of the quality of persistency out here. Second question is on the claims ratio part. While you’ve given the retail health claims ratio number and I know that you know your price hikes normally take around a year or more to flow through to the nep, but even at least for the first six to nine months, if you can get the claims ratio or some quality to understand the claims ratio increase on yoy basis for the cohorts where price hikes are taken versus others and a similar reference for FY2025.
And lastly on the claims part, in terms of the rise on a YUI basis how much would it be driven by medical cost inflation and how much would be by claims, frequency or intensity? So those were the three questions.
Anand Roy
Okay, thanks for the question. Let me just answer the persistency part and I will request my colleague Amitav to answer the other two questions on the persistency. You know, I would say that given my knowledge of the industry, StarHealth has probably the best persistency in the business, as we have always demonstrated very high consistency rates in terms of value and both volumes. As far as value is concerned, we have 98% persistency on value, but in terms of even on volume, we have seen high levels of persistency, upwards of 84, 85% in terms of volume. So given our large base, I think this kind of speaks very highly about how customers perceive our services and the trust in the brand that they have.
And we take persistency very seriously. And we are also seeing good traction in our various cohorts of customers. In terms of R1, R2, we track them obviously at different cohorts, claimants, non claimants, geography wise, channel wise, and in all the parameters, we are seeing an upward trend. We can have a separate discussion on one to one basis with you in case you want to get more deeper into it.
Amitabh Jain
Yeah. So you know your point on loss ratio movements, if you look at last year, Q1 was higher by more than 350 basis points over Q4 of the previous year, whereas this year the increase has been less than 100 basis points in quarter one over quarter four. So if you look at the last few quarters, we are getting more stable and the trend is improving and we hope to continue that trend and we expect to improve further. As far as combination of what has. Caused the increase, that is always a. Mix of frequency and severity. The good part is that we are seeing better trends on frequency. Severity also is more or less in line with our expectations. So we hope to be controlling the portfolio going forward. More and more and unexpected lines.
Dipanjan Ghosh
Got it. So just one small follow up on the second part in terms of the claims ratio between products where price hikes have been taken versus products where price hikes have not been incurred. Any color on the trajectory of claims issuing these two different product baskets.
Amitabh Jain
Yeah. So see as you mentioned, that it takes time for the earned premium to start showing and bringing the lrs under the targeted numbers. What is also very important to look at is that the granular underwriting approach that you’ve taken in terms of focusing on various profitable cohorts and micro segmentation of the market, all those cohorts we are seeing very healthy growth in our business mix as well as the growth of some of the unprofitable segments. So that is also driving the loss ratios and that full effect of that will come over a period of time.
Dipanjan Ghosh
Got it. Thank you sir and all the best.
operator
Thank you. The next question is from the line of Avina Singh from NK Global. Please go ahead.
Avinash Singh
Hi, good morning. Thanks for the opportunity. A few questions. The first one would be again on a trend the trend that I mean anecdotally and some commentaries from some of the lenders and all. It seems like there’s a kind of a divergence in terms of how patients do who are. Whereas large corporate hospitals continue to see good kind of, you know growth across all the parameters. Whereas the smaller nursing home or there is, you know shops are seeing challenges now in terms of of course you have been taking price hiking but if this trend continue in terms of your continues to sort of incremental flow going towards you know the bigger corporate led hospital.
I mean do you think or do you see that trend is able so that your current price hikes will be taking care of that or there could. And what else could be your kind of incremental move if this thing continues? Because that will kind of are going to have impact on the claims average claims cost. That’s a similar kind of you know problems going to a smaller nursing home versus going to a large corporate hospital. So what are kind of your you know measures that can kind of you know address this concerns if at all.
And of course you can also tell that if the trend is there or not because I mean I will have a minted total point and what I’ll see that’s one second in terms of the phrase, you know what is the renewal. This is more of a I would say a data keeping request this press and the renewal retail premiums if you can help. I mean I will secretly get in touch the absolute numbers in terms of the quarterly trends these premiums because many of the times because this one yield has come into picture and then there are certain other things mixed up up the actual number looks a bit difficult because for the quarter the number says 25% fresh retail growth despite a 97.7% kind of a premium persistency.
But based on that because the last year same quarter your premium positions was lower. So I mean what I am getting is the higher base number for this last year. So some of if you can just help with the absolute number kind of if you can provide us. So thanks.
Anand Roy
Yeah village. Thank you definitely, we can provide that offline to you. As far as your first question is concerned on the trends in utilization of services of large corporates versus regular hospitals. See, let us, let us accept that people buy insurance so that they can go for higher quality of treatment than they would have otherwise been able to afford from their pocket. Okay? So that is one of the main reasons why people buy health insurance. And so I think, you know, that is to be fair to the consumers. They do look for that, you know, options.
But having said that, how are we mitigating our business, you know, outcomes with this trend? We see that, you know, as I spoke in my speech, you know, the company has very, very granular risk based pricing. Now all our products are based on zones pricing. So customers in higher zones obviously pay higher premiums to match that trend. And similarly, there are now products which are also having facilities like network based discount. If customers so choose that they want to have an affordable premium, they can opt out of certain network of hospitals and take a lower premium.
This is more affordable. So all these options are available to consumers. Ultimately it is what the consumers want that we have to solve for. And we are taking our products and pricing strategies to reflect that traits.
Avinash Singh
Thanks. Just a quick follow up on this. I mean, so how are you seeing the traction of that product, Product or rather a rider that kind of allows the premium to reduce by excluding set a certain set of hospital is that traction? I mean if you can quantify, I mean how has been that direction where I mean a customer can choose to sort of buy, add the rider that excludes certain hospital and treatment become affordable. Because there has been kind of, I would say again here a bit of a diversion commentary. Some of the large distributors saying that there’s a good traction, whereas some, you know, insurer saying that no, no, that is not really.
So what is your experience on that front?
Anand Roy
So see, we launched this Flixi rider only about a couple of months ago. So we still don’t want, I mean, still it’s too early to comment as far as our business is concerned. But what we are doing is we are obviously, you know, promoting that as a concept and if the customer so chooses, he or she can opt for it. While we do that. You are aware that there are multiple other efforts going on at a larger level, both at the company side as well as at the industry side to create some kind of discipline in the hospital in terms of the driving and in terms of protocols and so on and so forth.
I hope that as the days go by, things Will become better in that management as well.
Avinash Singh
Okay, thank you. All the best.
Anand Roy
Thank you.
operator
Thank you. The next question is from the line of Adipi Joshi from JP Morgan. Please go ahead.
Aditi Joshi
Yeah, thanks for taking my question in the comments. I think we have shared that the share of Superstar Health Assure in the new business is roughly around 80%. But are you also able to share the portion of those policies in the already written business and in the existing book of policies if you are able to share the portion of other product, let’s say the family health Optima, if that’s possible. And the second question is again, if you are able to share the number of multi year currencies.
Anand Roy
Yeah. Thanks Aditi for the question. In my speech I said that Assure and Superstar combined contributes 80% of our new business. If you want product level data, we are one of the few companies that is publishing product level data on our public disclosures. We can share it with you. So that is not a problem. As far as multi year policies numbers are concerned, multi year policies on the retail side now contributes 8% of our overall volume. In terms of value it is obviously higher.
Aditi Joshi
So just follow up on the multi year 8% share. Is it the new business you have you’re referring to?
Anand Roy
Yes, yes. Sorry, what did you ask?
Aditi Joshi
As in. In the new business or in the fresh business, what is the share of multi year policies? Is it 8% based on the fresh.
Anand Roy
No, no, no. That is on total business new business it is up to 30% in terms of number of policies.
Aditi Joshi
Thank you.
operator
Thank you. The next question is on the line of Sanket Gora from Avendus Park. Please go ahead.
Sanketh Godha
Yes, thank you. Thank you for the opportunity. We have been following IFRS profits but if I exclude honestly mark to market gains from ifrs then we see that actually in your IFRS the profit has deteriorated little higher compared to what you have reported in the accounting profit because it has shown a decline by 18%. If I exclude mark to market, it has declined by 31 percentage. So given you are getting that benefit, still the pain point seems to be clean. So obviously again circle back to the same point that that on Queens. Any respite we can see in foreseeable future and if it is how it will play out.
Anand Roy
I’ll ask Nilesh to answer. Sanket. But before that I just want to again reaffirm that we are as an organization now tracking only ifrs reporting numbers. Because we believe that is a true reflection of our business. But I’m requesting Nilesh to answer more.
Nilesh Kambli
Sankesh, you know if for Q1 you are excluding MTM gains for Q1 25 also you will have to exclude MTM gains to have a better comparison. One more point to stress is, you know if you see your portfolio mix, it has moved to 17.5% when it comes to equity ETF, AIF so there is a loss of interest income also on that you know you cannot completely exclude the MTM gains.
So even if you had 2.5% as income of that you will clearly see that there is a good improvement in the IFRS results like to like compared to last year. So you’ll have to consider all the factors.
Sanketh Godha
Sure. Actually but when I did the math I excluded mtm gain in 1qfi25 but I understand that if you are structurally moving towards more equity and then benefit is real, then you can factor in the gain. But the reason I’m asking is that typically MTM is not appreciated by the street. If profit is driven by by MTM and excluding MTM it seems to be still weak. That’s the reason I asked that question in the sense.
Nilesh Kambli
So excluding MTM also we have an underwriting profit, the drop is marginal while the claim ratio has been higher. We have seen a hundred basis point reduction in the expense ratio which is quite substantial and all the measures, you know, be it the procurement cost, be it the CAC for digital businesses beat our, you know, manpower cost. We have taken a good reduction over the year which is helping us in terms of reduction expense ratio.
Sanketh Godha
My second question is on discount based pricing to our portfolio. Just wanted to understand the 23 colors there. Basically today have you taken any price hike on any other products in the current quarter, if else whether it has been on discount based pricing approach? And can you tell me today how much portion of the book is already moved to discount based pricing? And by means subsequently when you take price hikes for other products, if you follow the same approach by when you feel the entire book will move to discount based pricing.
Anand Roy
So Sanket, let me give you the principle here before I get into the numbers. You know as an organization we believe that we have to be fair to two populations in insurance. We spoke about this when you met me in person. There are two populations, claimants and non claimants. We have to be fair to both of them while we are doing our pricing strategy. And that’s why this model of discount based pricing which is now allowed under the regulations is also something that we are pursuing. Specifically to your question, have we introduced this in any other product in this quarter? Not yet.
We are looking at, as I told you, an annual price increase. So when the pricing comes up for reconsideration at that point we will probably move most of our products into this model. And we are happy to tell you that this model is well accepted in the market and also giving us the desired results in terms of yields and customer retention.
Sanketh Godha
So maybe from data point of view, how much today is the entire book under discount this pricing Maybe you might have plans to take price hikes in subsequent quarters for the other products. So maybe by end of next year or early next year that is SI27 the entire book will move to this pricing approach because this is ultimately a very good solution for the entire health insurance industry. So just wanted to understand when we will see the entire book to get repriced on this pricing model.
Anand Roy
So right now around 30% the FHO is the only product which is of this pricing which is constituting now around 30% of our book as we end this year. Hopefully that number will become when we move towards other products as well. But we will keep you informed. Sankesh, right now not able to give any particular number to it.
Sanketh Godha
Okay, Perfect. Perfect. And last one Anand. If you can give a bit of color of your loss ratio maybe on new and renewal book in total maybe I don’t want bucket wise cohort but 68 odd percentage loss issue what you have reported any color how you are seeing the trend in new and renewal moving whether new is improving and renewal is deteriorating or it is both moving in tandem. This is to understand whether we are getting granularity, right? To understand that maybe today the loss issues are not that great. But eventually with the mix change or the mix or renewal improving then loss issues can we actually see an improvement going ahead?
Anand Roy
Saket, we can discuss that offline but what I can tell you is that we track cohorts on combined ratio basis and obviously we take decisions based on that. But I’m happy to discuss that with you offline. Okay.
Sanketh Godha
Okay. Okay. That’s it for myself. Thank you very much.
operator
Thank you. The next question is from the line of Swarna Mukherjee from BNK Securities. Please go ahead.
Swarnabh Mukherjee
Hi sir, thank you for the opportunity. Couple of questions on the loss ratio side. So first of all I think we have many net claims number of around 2700 crores this quarter. Just wanted to understand that in the subsequent quarter. Now because first quarter is not seasonally high for claims. How should we think about this for the subsequent quarter? And maybe if you can give some indication in terms of how the situation is There in July given the monsoons and you know the period for seasonal diseases that will help us understand maybe you know how we should expect the numbers to move over the next quarter.
So that is on loss ratio and also if you can maybe sir highlight that on the FWA savings. What is the impact that is there on the loss ratio? If you can give some number on that. So that is the first question. Secondly sir, in terms of the new customers acquired or the. I mean the fresh growth that is there. If you could give some color on how the customer cohorts are maybe in terms of age profile and you know how. How is the expected loss ratio from this customer cohorts? Visa will say maybe you know customers who used to acquire maybe two, three years prior because our channel mix up kind of also moved quite substantially.
So some color on that would be useful. And in the digital channel sir, I see that the fresh premium growth is around 73% but NOP growth is around 16. Fresh NOP growth is 16%. So just wanted to understand, you know, has there been any substantial product change in the digital channel or price hike? If you could give some color. And lastly data, data keeping course questions are on the persistency side. Can you give the persistency on the or the renewal ratio on the volume basis? I mean in terms of nop if you could. Yeah, so this would be my questions.
Anand Roy
Yes. So I will answer from the last question. Our persistency on volume basis is around 85% for the retail business that we have and on value basis is around 98 odd percent on the digital channel. SunNav, as you rightly said, our digital channel continues to grow at 73%. We have seen an uptick of multi year policies on digital channel which welcome because multi year policies give us better retention and persistency in the R1 R2 years which is the most critical years as far as age profiles are concerned. We can discuss that offline. Obviously in this conference.
We don’t have time to get into those details. I’m requesting Mahita to talk about the FWA piece which you had asked.
Amitabh Jain
Yeah. Hi Sana. So on the first point that you. Made on planes, let’s Q2 as a quarter has a seasonal effect and claims will be higher but so will be our provisioning for the premium and the growth that we are going to get over the last year’s premium because of the price hikes we took from Q2 onwards till the end of the year. So that will also play out. What is good to know is that July is on expected 9th and we have not seen any abnormal trends so far and we expect that that will continue. And you know that will help us manage the overall cost ratios on expected lines that we had budgeted.
Swarnabh Mukherjee
Right sir.
Amitabh Jain
On the fwa, you know we have been working on this now for the last more than one year and as stated we’ve got roughly a 30% increase because of our improvement in the models etc. In the overall savings and we’ll continue to work on that to make an impact.
Swarnabh Mukherjee
Right sir. Any quantification on loss vector from FWS.
Amitabh Jain
So that you know, we can take offline and discuss that separately. As far as you know, all the effort that we’ve been taking is not simply because of MWA but also a lot of work that we’ve been doing on telemedicine and wellness that has helped us in managing the medical frequency much better. So you know, because of our outreach. To our distribution and our customers to. Offer telemedicine, home health care and you know, all the other wellness solutions that’s also now started playing out in both our frequency as well as severity.
Swarnabh Mukherjee
Right sir, understood. Just if I may ask a quick follow up on the long term product. So sir, just wanted to understand how are we paying the commissions on that? Is it on a N basis or a one by n basis? And how are you seeing the situation in the industry in terms of commission payout for long term products?
Anand Roy
Why do you want to know our trade secrets? You look at our eol, that’s the only thing that will give you a guidance about how we are feeling.
Swarnabh Mukherjee
Okay. Okay sir, okay, I’ll take it offline here. Thank you so much and all the best for the rest of the year.
Anand Roy
Thank you. Thank you.
operator
Thank you. The next question is from the line of praise Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi everyone. Just similar questions to what I’ve been asked previously. If you could highlight some parts on whether a fresh combined ratio versus the renewal combined ratio on the retail book that would be helpful to us to understand as to how are things really operating between fresh and renewal. Second Anand, when you had mentioned about the growth aspects of you know, when the longer term guidance of doubling the premiums and tripling the ifrs pad what was the assumptions with respect to investment was underwriting in that number to kind of understand as to, you know, whether we are on track for it or whether you know the ifr the mark to market is helping us more rather than the underwriting profit and we are kind of deviating from the Underwriting assumptions that we would have made in that guidance.
And lastly, you know, from an expense standpoint, while you know we see that the employee cost has not grown materially, even not in line with the inflation, what are the thoughts there as to whether we have not hired enough or we are not hiring more or we have not given pay hikes? What is the thought? I am happy to see that number. But what’s the thoughts behind employee cost not going so much? Those are my three questions. Thanks.
Anand Roy
Yeah, so as far as the guidance that we have given for FY20 on 2500crores on IFRS basis I think the broad split could be 20% on underwriting and 80% on investment returns. But having said that, we will come back to you with more details on that. What I would like to call out here is there has been a change in our strategy in terms of corporate business going ever since we been looking at the numbers for the last two years. Years. So probably you know, we will have to revisit that. Overall guidance of 30,000 crores may be moderated to adjust for the corporate business. But on the bottom line side we are quite confident to move that. But coming on your other questions on fresh and renewal core we don’t give those kind of data in the public domain but we can have this discussion on a one to one basis.
Prayesh Jain
Sure. And this on the cost front.
Anand Roy
On the cost front, see as you said we are focusing more on productivity gains and increasing the, you know, the existing manpower efficiency itself and all the investments that we have been making through technology over the last two, three years which we’ve been calling out is showing results as we speak. You know, so if you look at our digital business itself we have been able to demonstrate such a large increase in growth with actually a lesser number of people. So I’m very confident that you know, this efficiency will continue to be better and better and we will be able to do more business with same or lesser.
Prayesh Jain
Last question on somershot. You know, any thoughts as to how has the sum assured been moving for us on the retail side especially on the fresh? Are we writing more 10 lakh plus kind of sum insured? Some data around it would be helpful. Thanks.
Anand Roy
I’m requesting Himanshu to just answer the question.
Himanshu Walia
Yeah, so our average sub insured is increasing consistently at 15% and on the total basis we are at 11 lakhs on an average and when it comes to fresh that’s growing at about 15 to 16%, about 12 to 12 and a half lakhs so we are seeing consistent growth across all segments and year on year basis.
Prayesh Jain
Great, thank you so much.
operator
Thank you. The next question is on the line of Nishit Chatwi from Kotak. Please go ahead.
Nischint Chawathe
Yeah, hi Nishvint here. Just one or two questions. One was on the bancar side. What we can see is that fresh GWP has come down a little bit on a year on year basis. Anything to read in this?
Himanshu Walia
See, bank assurance continues to contribute 7% of our overall business. And in this business we are largely focused on preferred segment. Across partnerships we have seen a significant shift toward our preferred product portfolio. And the fresh mix of preferred portfolio has increased to 92% from 74% of over last quarter. And on the non preferred segment we have exited few accounts and there we have seen a degrowth overall on the preferred segment our growth rate is upwards of 20%.
Nischint Chawathe
Got it. And anything to read in the, in the reduction in telecollers.
Aditya Biyani
So you know we’ve been doing this telecalling direct digital business for the last couple of three years with a very good focus. We realized that okay, we probably have the better efficiency towards the number which we have moving towards the 1500-1600. The leads are increasing, the efficiency is improving and you must have seen the direct digital growth also. So we are comfortable with this number and that is where we want to be there for a longer time too.
Nischint Chawathe
Got it. And just one clarification. You mentioned that around 30% of the new business volume and probably a much higher proportion on value comes in from the, from multi year policies.
Anand Roy
Yeah, that’s correct.
Nischint Chawathe
And what would this ratio be like two years back? I believe you know, you’re not focused much on multi year policy in the. Past.
Anand Roy
Two years back data will get back to you. But this has been growing rapidly over the last few years and I think it is good for all players in the ecosystem whether the customer or the insurance company because it helps everyone.
Nischint Chawathe
I mean numbers apart, fair to say that there is a change in the strategy out here.
Anand Roy
Of course, of course. So that’s what I mentioned, you know, because see multi year plans gives two benefits to the customers. First is of course, you know, they get a visibility for three years in terms of their premiums. And second for the insurance company, first year, second year persistency is the most important and this helps us to attain that. And even for the distributors it’s a assured business model. So I think everybody gains and we are focusing more on issuing of plants.
Nischint Chawathe
Got it. Thank you. Thank you very much.
operator
Thank You. The next question is on the line of Nitesh Jain from investech. Please go ahead.
Nidhesh Jain
Thanks for the opportunity. My question is on the investment yield which has declined roughly around 100 basis. Points from the previous years. So in that light, if I assume that the decline in investment yield is now being will be there for some time because interest rates have declined, how do we change our pricing strategy to deliver the reasonable roes? Do we take into account investment yield when we are pricing the products?
Anand Roy
Of course we do, but I would request my colleague Anish to elaborate on that.
Aneesh Srivastava
Yeah. Hi Nitesh. Yes, obviously whatever investment yields are, there are certain assumptions when we are doing a product pricing investment yield decline. Yeah. From fixed income yield perspective, yes, you would see that. But what we perceive is that over say three year period, investment fees would remain attractive. Actually and rather because of equity being a higher yielding asset, our senses that overall yields of the portfolio would be higher than what the strategy that we had so far of largely focusing on fixed income book.
So basically our equity book has grown from say 10% of AUM to say 15% somewhere around March and today it stands at 17.5. This includes equity, AIF, REIT in fixed. So our sense is broadly that this would lead to on a three year rolling basis, higher yield and as I mentioned that obviously there are certain yield assumptions which go into product pricing.
Nidhesh Jain
Okay, sir. Secondly, we have seen improvement in I think a lot of matrices like fresh growth has picked up in FY25 that continued. That has been quite heavy trend in Q1. Then we have taken a decent price hike last year and this year also. I think we will be taking some price hike. So when do we expect our loss ratio trajectory to improve and reach, let’s say 65% of it? And do we expect now loss ratios to consistently decline on a quarter, on quarter basis? Because these trends, improving trends we have been seeing for last almost now three to four quarters.
Anand Roy
Yeah, so see, I think you rightly put it, we have taken multiple measures to improve the quality and the strategy of our book. I think. See, the loss ratio improvements are an outcome of multiple things, right? As you rightly put it, price increases, underwriting strategies, risk selection and so on. We would expect the loss ratios to improve. We are not willing to give any guidance this year, but we stick to our long term guidance of FY20, which is the goal with which we are all working towards.
Nidhesh Jain
Okay, thank you. That’s it for myself.
Anand Roy
Thank you.
operator
Thank you. Ladies and gentlemen. In due to time constraints, this would be our last question. I would now like to hand the conference over to Mr. Nilesh Kambly for closing comments.
Nilesh Kambli
Thank you all for the questions and joining us Today to summarize, Q1 26 has been a quarter of consistent executions. We have delivered a healthy growth in our retail portfolio, maintained focus on profitability through calibrated pricing and distillation, and continue to invest in our technology, distribution and deals infrastructure. Thank you all for joining the call.
operator
Thank you on behalf of Star Health and Allied Insurance Co. Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.