Star Health and Allied Insurance Co Ltd (NSE: STARHEALTH) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Pratik Patil — Investor Relations, Adfactors PR
Anand Roy — Managing Director, Chief Executive Officer
Aditya Biyani — Chief Strategy & Investor Relations Officer
Nilesh Kambli — Chief Financial Officer
Amitabh Jain — Chief Operating Officer
Analysts:
Shreya Shivani — Analyst
Avinash Singh — Analyst
Prayesh Jain — Analyst
Supratim Datta — Analyst
Madhukar Ladha — Analyst
Uday Pai — Analyst
Prakash Kapadia — Analyst
Dipanjan Ghosh — Analyst
Jayant Kharote — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Star Health Allied Insurance Company Limited Q3 and Nine Months FY 2025 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 the conference call, please signal an operator by pressing star, then zero on your touchstone phone.
I now hand the conference over to Mr Pratik Patil from PR Investor Relations team. Thank you and over to you.
Pratik Patil — Investor Relations, Adfactors PR
Thank you,. Good morning, everyone. From the senior management we have with us Mr. Anand Roy, Managing Director and Chief Executive Officer; Mr Nilesh Kamli, Chief Financial Officer; Mr Anish, Chief Investment Officer; Mr Amitabh Jain, Chief Operating Officer; and Mr Aditya Biyani, 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 those 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’s services. Further, I would like to mention that some of the statements that are made today in conference call may involve risks and uncertainties.
Thank you, and over to you, Mr Anand.
Anand Roy — Managing Director, Chief Executive Officer
Thank you, Pratik, and a very good morning to all of you. As we begin today’s earnings call, let me take a moment first of all to wish everyone a happy and prosperous New Year 2025. I know it’s towards the end of January, but it’s the first time we are connecting. So it’s a privilege to connect with you today. As we step into what promises to be a year of very positive changes and welcoming regulations for our industry.
To take you through the details, I would like to hand over the mic to our colleague, Aditya. Aditya, over to you, please.
Aditya Biyani — Chief Strategy & Investor Relations Officer
Thank you, Anand. Good morning, everyone, and wishing everyone a very happy and prosperous 2025. The insurance landscape is evolving rapidly, shaped by significant regulatory and accounting developments. These changes, while complex, are a reflection of our industry’s maturing framework, one that emphasizes transparency, global alignment and customer-centric approach. Let me take a moment to outline how each of these regulatory changes will impact the industry and why they are critical. Firstly, the new reporting framework for long-term policies effective October 1, 2024, marks a shift in premium recognition. Previously, insurers could account for the entire premium of a long-term policy in a single year, reflecting a higher gross written premium.
Under the new framework, the premiums will be annualized with the total premium divided by the policy tenure and recorded proportionately for each year. For instance, for a three-year policy, only one-third of the total premium will be recognized in the first year’s gross written premium. This change will lead to a reduction in the reported gross written premium, which in-turn will reflect changes in net earned premium and net return premium having an impact on the expense ratio and loss ratio of the insurer.
At StarHealth, we are following one by three 65 days unexpired risk reserve method, resulting in no deviation in net earned premium under the new regulatory framework. Secondly, the adoption of IFRS standard is on the cards for implementation in the next couple of years, which marks a pivotal shift in how insurers align revenue and expenses. This transition will enhance clarity in key financial metrics, including net earned premium, investment income and acquisition cost. Under IFRS, net acquisition cost will be deferred in-line with the policy tenure and will reflect true economic return-on-equity. Additionally, these updated standards will enable greater transparency and improve comparability between industry players.
With implementation of one by end methodology mentioned above, there is a partial move towards the IFRS reporting in terms of net acquisition cost, which gets accounted in future. Thirdly, the expenses of management regulation which came into force from 1st April 2023 mandates maintaining an EOM to gross written premium cap of 35% for Saji players. At, we are well below this requirement, which enables us to strategically focus on retail market expansion and advanced service delivery.
Moving on to the industry performance on one by end basis, in nine months FY ’25, health insurance industry has grown by 11% and has reached INR94,908 crores. This robust growth was driven by 14.3% growth in retail health and 12.4% growth in group Health. In order to maintain consistency, clarity and comparability of numbers, we will be showcasing our business numbers in one by end and without one by end for this financial year. Coming to performance, in nine months FY ’25, without one-by-end framework, on an overall basis, our GWP has grown by 16% and the fresh GWP grew by 27%.
Coming to our Retail Health segment, our overall business has grown by 14% and the fresh retail health GWP grew by 22%. We have retained our retail health market-share, which now stands at 32.2%, which is three times larger than the second player in the industry. Fresh retail number of policy growth stood at 13%, emphasizing our focus on volume growth and value growth. Our fresh to renewal ratio for nine months FY ’25 is 24 is to 76 as against 22% is to 78 over the same corresponding period last year. We continue our focus on the risk-first growth later strategy and these numbers are in context of this strategy with prudent and tighter underwriting standards.
Now moving on to our four engines of growth, ABCD without one-by-end basis for the first-nine months. Firstly, I would like to highlight A agency. Our agency vertical contributed around 80% of our overall business in Nine-Month FY ’25. Our agency strength has increased to 7,61,000 agents with net addition of 19,000 agents in the December quarter. The agent recruitment number has now reached 66,000 in the first-nine months of this financial year. We have also seen a strong 14% increase in fresh GWP in Nine-Month FY ’25 over last year through this channel. Agency activation for Nine-Month FY ’25 has grown by 13% over Nine-Month FY ’24.
Coming to Banca, in nine months FY ’25, our banca channel contributed 8% to our total business and the business has grown by 20% on overall basis. Our number of banca partners now stands at 69. In this quarter, we added names like Bajaj Finance and new growth to our portfolio. For corporate in Nine-Month financial year ’25, our corporate business contributed 4% to overall business. Our proprietary over-the-counter SME calculator has strengthened our association with intermediaries who have been generating new business focusing on SME and MSME business segment.
Coming to digital business, our digital business comprises of our own direct-to-consumer, online brokers and web aggregators, which contributed to 8% to our overall business in nine months financial year ’25. Our own direct-to-consumer channel contributes 72% to the digital business and the remaining 28% comes from online brokers and web aggregators. Our fresh business from digital grew by 58%. Coming to the financial performance for Nine-Month FY ’25 on one by end basis, our combined ratio for Nine-Month FY ’25 stood at 101.8% versus 98.3% in Nine-Month FY ’24.
I would just like to highlight our combined ratio without one by end stands at 101.3% for Nine-Month FY ’25. Our claims ratio for Nine-Month FY ’25 stood at 70.7% versus 67.3% in Nine-Month FY ’24. We would also like to highlight our retail loss ratio for Nine-Month FY ’25, which stands at 69.2% and Group loss ratio is 90.4%. Expense ratio for Nine-Month FY ’25 stood at 31.2% versus 31.31% in Nine-Month FY ’24. I would like to highlight the expense ratio on without one by end, it stands at 30.6% for Nine-Month FY ’25. For Nine-Month FY ’25, PBT stood at INR862 crores. PAT for Nine-Month FY ’25 stood at INR645 crores. Our non-annualized ROE for Nine-Month FY ’25 stood at 9.7%.
Our investment income in Nine-Month FY ’25 has grown to INR996 crores versus INR790 crores in Nine-Month FY ’24. Our investment assets have grown by 15% and has reached INR16,66 crores in Nine-Month FY ’25. Solvency of the company as on December ’24 was 2.22 times compared to the regulatory requirement of 1.5 times. Coming to the other key highlight, our NPA — our NPS score stands at 56 for the quarter ended on December ’24. Our claims NPA stands at 63% as on December 31, 2024 versus 53 on September 30, 2024. Our claims rejection rate stands at 10.22% for the quarter ended December 31 December 2024. Our renewal persistency has improved to 87% on number of policies. Our app downloads have reached 8.6 million as on Nine-Month FY ’25.
Our monthly active users have crossed 1 million as of December ’24. The organic traffic to our website has grown by 28% over last nine months. The digital issuance as a percentage of premium collections stands at 70% in Nine-Month FY ’25 versus 65% in Nine-Month FY ’24. The PSC and wellness contribution to total claims outgo stands at 0.6%. Our home healthcare initiative has now been expanded to 100 locations and has been widely embraced by customers steadily gaining recognition. With support of trusted partners like Apollo, Max Home Health and, we ensure reliable personalized care that meets the diverse needs of customers across India.
The average sum insured of new policies has increased by 10% to INR10.6 lakh per policy. INR5 lakh and above some insured policies now constitute 82% of our retail health portfolio versus 77 in Nine-Month FY ’24, the share of long-term policy within our GWP has increased to 10% in nine months FY ’25 versus 7% in Nine-Month FY ’24 on without one by end. We have had to align our product pricing strategy to match the market reality. Up to Jan ’25, we have implemented price increase across five products, which is approximately 65% of our retail health portfolio.
Our recently launched new product Superstar offering unpanaled flexibility and customization offers 21 optional covers in addition to its exhaustive list of base covers, unique benefits such as freeze your age, limitless care, superstar boners, wellness programs and premium waiver make it stand-out in the market. We are proud to share that Superstar has achieved remarkable success driving fresh growth for the business. It has also become the top-selling product on our digital platform and also on the leading web aggregator and digital partners.
And with all these updates, we can now open the floor for Q&A. Thank you.
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 R&1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
We’ll take our first question from the line of Shriya Shiwani from CLSA. Please go-ahead.
Shreya Shivani
Yeah, good morning. Thank you for the opportunity. Am I audible? Hello?
Operator
Yes, please go-ahead.
Shreya Shivani
Yeah. Okay, sure. I have two questions. First, I wanted a clarification. You mentioned that your GWP growth without 1 by N is 16%. However, in your subnotes in the P&L, you’ve given that about you’ve given the exact amount of premiums that have been deferred because of this one by end accounting. If I adjust for that, your — which is about INR30 lakhs or so. If I adjust for that, the growth looked more like 13.5% to 14%. I just wanted a clarification if what I heard was correct. Second, what I wanted to understand was on the commissions and how it may have played out in this quarter. So clearly, your reinsurance also got deferred along with the one by long-term policies, which means that the income that you were earning from the reinsurance commission has become smaller.
So ideally your commission absolute amount should have picked-up in the quarter, should have been larger than at least the last quarter is — I mean, that was the rough math I was arriving at, but that’s not the trend that has come up about. So if you can help me understand how that — why that hasn’t played out? And also the way the expense ratios have become elevated, it’s fair to say that this is going to be the standard going ahead. So are we looking at a 4th-quarter where — where we usually — the reserves are added, which means our PAT can be much, much lower. In fact, it could be a very weak quarter going — going into 4th-quarter. Those are my questions. Thank you.
Nilesh Kambli
Yeah. So, on the GWP growth, the number you’re talking about is quarter three, which is 13.7%. For nine months with the one by an impact, it is 16%.
Shreya Shivani
Okay, okay, got it, got it. Yeah.
Nilesh Kambli
In terms of RI commission, yes, yes, for long-term policies, there’ll be no RI commission. But if you’re comparing it with last year, last year, we had the RI commission TT, which came in Q3 itself, which was effective first FY ’23 from April ’23 to December ’23, there was a one-time impact in Q3 last year, which is spread-out in all the quarters this time. And in Q3, we had an impact because with one by end on long-term policies, there is no CD as well as there is no reinsurance commission.
Shreya Shivani
Okay. So the reinsurance treaty itself has changed this time. There is no change because of the way the accounting is done. Is that my — is my understanding correct?
Nilesh Kambli
No, there is a bit — because of the change in accounting, there is a of reinsurance commission which has happened. Of course, I’m not booking the top-line and hence there is no seeding and no RI connection. There is a change.
Shreya Shivani
Okay. Okay, okay. Got it. And this the reinsurance seeded is about 6.3% or so. Will this be the steady-state going ahead?
Nilesh Kambli
Yeah, it will be in the similar the range with the mix of business.
Shreya Shivani
Got it. Got it. And on the sales cost, yeah. Yeah.
Nilesh Kambli
On the 4th-quarter, you know, with the trading, I mean with the accounting coming in, the there’ll be a deferment of cost in terms of the long-term policies. So there will not be much impact on the PAT is what we see with RA commission and you know the cost also getting deferred.
Shreya Shivani
Yeah, but see this quarter we got a bit of support because it’s a quarter where 3rd-quarter is when we release reserves. The URR is — change in URR is negative. 4th-quarter is usually when those — that number becomes much bigger, right? So the PAT is always sequentially or 4th-quarter PAT is always weaker. Now your expense ratios are also elevated unless there is a very sharp debt improvement in the loss ratio, the quarter can look very weak, right?
Nilesh Kambli
Yeah. I’ll explain it to you on basis, but what will happen is, because there is deferment of GWP, there’ll be a lesser impact on the URR as well. The earned premium will not change. Okay. And only accounting number because of the lower NWP, the expense ratio shows an increase. On a like-to-like basis, there is no increase. In fact, we are doing well on the expense ratio.
Shreya Shivani
Okay, okay, sure. Those are my questions. Thank you.
Operator
Thank you. We’ll take our next question from the line of Avinash Singh from Emkay Global. Please go-ahead.
Avinash Singh
Good morning. Thanks for the opportunity. The first question again kind of for data keeping. If we look at this impact on GWP from 1YN, that’s close to INR300 odd crores or like say, 8% per decline for the quarter. If — I mean, if I do sort of a very, very crude simple math assuming that, okay, the average tenor of the long-term policy to be three years, is it correct to assume that nearly close to 12% of your entire GWP. In this quarter was kind of a — you know that impacted by this one by NA accounting. So broadly that, okay, the 12% is a figure for one by N. So that’s question one.
And secondly, more again, I mean, this is more from, I would say, a very fundamental and perspective that you have been kind of for taking actions in terms of pricing or whatever you can do with your network hospital, yet the claims ratio remains way beyond the comfort zone of — for our model as a standalone health insurer. I mean you would like it to at least go below, say, 67-odd percent currently were running even for the nine months near 70 or 70 plus. So the question is that, okay, I mean, how long do you see this — that your excern and the market reality is going to take before, I mean we are anywhere closer to what is the desirable sort of range in terms of claims ratio. I mean, of course, expense and all are sorted. So there is not much I think that, okay, you can do there. So for you, it becomes a kind of an imperative to whatever you can do on the claims side. And there, of course, despite your access, things are not kind of improving the way you would like to. So I mean what kind of a timeline would you see before these things start to play — I mean play-out and the numbers looks you know somewhere where you could be comfortable relatively. So two questions.
Nilesh Kambli
Yeah. So on your second question, the — regarding the loss ratio, if you look at sequentially, the loss ratio has come down from quarter two to quarter three by almost 1.4%. But if you look at further, if we segregate between retail and group, retail has actually come down by almost close to 2%, roughly 180 basis-points. So clearly there is improvement. Yes, we would like it to be better than this. And you know some of the actions that we’ve been taking are towards that. But there has been a consistent increase in frequency and severity, largely driven by heightened awareness in cashless availability, accessibility, active reach-out by hospitals and generally a more higher preference for you know, going for surgical interventions rather than going for conservative treatments and all.
So keeping that in mind, you know, we’ve taken consistent price increases across our products. And by the time we entered Q4, which is our biggest quarter, we’ve already repriced close to 65% of our retail portfolio. So to that extent, you know, I think whatever we need to do, given all the changes we are seeing, we have done most of that and we should start seeing the impact of this coming in the next few quarters. And as far as bank and group business is concerned, yes, there has been a more worsening on that side and those are annual policies where we can intervene much faster and do corrections much faster. So those corrections we’ve already taken in Q3 and therefore, going-forward that would look better.
Aditya Biyani
Yeah, in terms of your first question, there is a mix of two years and three years as well. So the long-term for Q3 will be 9% of our portfolio, 91% continues to be one-year policies.
Avinash Singh
So just as a follow-up. If it was 9%, then the impact timing because of and that is coming close to 7%, 8%. So I mean, if it was 9%, then typically you will account nearly say assuming that took it two, three years. So 3 odd percent you will account, so impacts would have been lesser because the impact appears to be close to 8% of your premium. That’s why I sort of asked that, okay, if it is higher.
Aditya Biyani
Yeah, it will keep on normalizing as we keep on booking the premium going-forward.
Avinash Singh
And just again just a quick follow-up. I mean, how has been the growth trend looking so-far in Jan because I mean today we are on 29th, you would have senses because December for whatever reason despite adjustment was weak for industry. So how has been — because you are sort of you have taken the price hike as well. So how has been kind of a growth trend looking in the month of Jan.
Anand Roy
So hi, Avinaj, Anand here. As you rightly said, there has been a lot of changes in the quarter three, both from regulatory framework as well as the macro situation. So we saw some disturbance that time. But quarter-four January growth looks very, very positive. In fact, on all the areas on the retail side, we are doing very well and we hope to close this year-on a very, very positive note.
Operator
Okay. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, kindly restrict your question to two at a time. You may join back the queue for follow-up questions.
We’ll take our next question from the line of Jain from Motilal Oswal. Please go-ahead.
Prayesh Jain
Yeah. Hi, good morning, everyone. The first question is on the expense ratio, right? That has stagnated around 30% and we are — we’ve been growing at, 15% 16%. Do we conclude out of this that the incremental acquisition is coming at a higher expense cost versus the — what was the trend previously? And this is the levels or possibly even we can see some increase as the fresh to renewal ratio kind of increases further. Do you think that this expense of management ratio would continue to trend is flattish or we can see some scale benefits if we grow at, 15% 16%.
Aditya Biyani
Yeah, so what we have seen is while it looks flattish, we have been improving our share of banca business, which is benefit products, which is a higher procurement cost. The second factor is for retail business also, the proportion of long-term has been increasing for us. So from April to September also has a proportion of long-term business. So — and that gets accounted upfront under the before one by and June. Hence the expense ratio looks to be flattish. As we implement one by and as we getting scale benefit, this will keep on coming down as we speak. And so we see a — we will continue to get the 0.5%, 0.75% benefit going ahead with specially with one buy and implementation is better.
Prayesh Jain
So you’re saying including one by end there will be still benefits of 0.5%, 0.7%.
Aditya Biyani
No, no. No, we have to normalize it for one by and on a like-to-like basis, there will be a benefit which will come in. It will move — the weight has moved up and then it will keep on coming down again because the base has changed.
Prayesh Jain
Okay. Second question is on your — you know, the combined ratio of each of these segments, if you can share that you shared-loss ratios, but the combined ratios in each of these segments, the retail and the group for nine months, that would be helpful. And secondly, just a suggestion, if you could report one by end numbers on a monthly excluding one by end numbers on a monthly basis, that would be pretty helpful to us. Thank you.
Operator
Thank you. And we will take our next question from the line of — should we take the next question, sir?
Aditya Biyani
Prash, can you repeat your question again, please?
Operator
One second, sir.
Aditya Biyani
The second question.
Prayesh Jain
Yeah, yeah. Can you hear me?
Aditya Biyani
Yes. Now you’re audible.
Prayesh Jain
I’m asking the combined ratio of group and retail for the — for the nine months, if you can share that, that would be helpful. And a suggestion was to start giving one by end numbers on a monthly — excluding one by end numbers on a growth basis — on a monthly basis. That would be helpful to us. That was a suggestion. But question is on the combined ratio of group and retail.
Aditya Biyani
Newly noted, I think we’ve already shared the retail loss ratios and group loss ratios. And considering retail is more driven by an agency, we are a retail driven organization. So more or less, if you see a combined ratio for the organization will reflect the retail loss ratios too. Retail combined ratios too. And in future, we will make a note of it. And if possible, we will try to share the combined ratios too, but no commitment right now on the conference call.
Prayesh Jain
Okay, great. Thank you so much and all the best.
Operator
Thank you. We’ll take our next question from the line of Supra Datta from Ambit. Please go-ahead.
Supratim Datta
Thanks for the opportunity. My first question is on the loss ratio and I understand that you have repriced 65%…
Operator
Please. You’re not very clear.
Supratim Datta
Can you hear me now? Is this better?
Operator
Can you speak a bit louder, please?
Supratim Datta
Is this better?
Operator
Yes. Please go-ahead.
Supratim Datta
Yeah. So what I’m saying is you have repriced 65% of your portfolio. How — and you expect that to positively impact loss ratio. But if I remember last year as well, you had repriced FHO product, which contributed around 40% of your portfolio by around 25%. However, we haven’t seen that positive impact come in this year. Your retail loss ratios for nine months is around 300 350 basis-points higher than what we were doing last year. So just wanted to understand why do you think this time the pricing actions will be different from what happened last year, if you could give us some color on that?
Because from a regulatory side, what we are seeing is the regulator keeps tightening, be it the kind of policies that you underwrite that there is tightening on that or on the claims and claim, there seems to be more focus on that both from a regulatory as well as political standpoint. So in this backdrop, you know-how — why should — why do you think these current price hikes should be sufficient to drive an improvement? If you could give us some color on that? That’s the first question.
On the second one, if I look at the group business of yours, you went out of this in FY ’23. Again, you went in FY ’24, the idea was that SMEs will result in better loss ratios. However, that experience hasn’t really played out. Now then from here, do you think that it’s better to exit this business again? Or do you think a price hike will be sufficient enough to address the issue? Because this is again a very highly competitive business and at an overall level. So I just wanted to understand what is our strategy going to be here from this point onwards, that again would give us some clarity.
And lastly, on the new business growth and the fresh business growth that you pointed out, last half — first of second-quarter, you had indicated that the first-half fresh business growth was around 31% and this time you’re saying nine months is around 22%. So 3rd-quarter has there been a slowdown or how should we read that or have I gotten my data wrong? If you could give some clarity on that, that would be helpful. Thank you.
Amitabh Jain
Yeah. Hi,, Amitab here. So you know, what is very clear is that pricing alone cannot solve for the entire portfolio loss ratio management. And therefore, along with price increases, we are taking various portfolio correction measures based on micro-segmentation of our portfolio, which is to do with which products, which markets, what kind of you know, add-ons, etc. Also the overall strategy on what we do for specific markets in terms of the way we handle our distribution. So all of that will go along with pricing to make some of these impacts. And of course, the work that is happening on the supply-side, which is how we deal with the providers and so on. So it’s all — it’s a 360-degree approach that we have to take and we are working on all of that to make things happen.
We are aware that pricing alone won’t solve for it. And see, we also have to be conscious that price increases beyond the point can be counterproductive because they might lead to either lower retentions or impacting fresh sales. So that also has to be kept in mind while we are doing this. The whole idea is that we get to a cycle of good growth on the fresh side as well as have good retentions, you know with the desired yield that we have designed in the increases. So that’s how we are approaching it.
Aditya Biyani
So Supratim, on the — on your other two questions on group and new business growth. I think we are quite — on the group side, the strategy was always very clear to focus on the SME and mid-corporates and that’s what we have been doing. But as you have rightly pointed out, even in those areas, we have seen an elevated loss ratio compared to what we had initially planned for. And that’s largely if you consider the whole industry’s loss ratio on the group side, it has increased and also has felt the impact, of course. So we continue with our strategy. There is no change in the strategy. We will keep focusing on the SME and the mid-corporate segments.
And as we have already mentioned in our opening remarks, it’s a small portion of our overall start business plan, but we will continue the same strategy. As far as new business is concerned, we are growing very well. In fact, we are very confident of, you know, doing much, much better as we go-forward because this new product of Superstar has really taken off very well for us on all the channels and we expect this to become even better going-forward. So first-half and second-half comparison cannot be maintained because bulk of the business comes in second-half. So growth rate on new business seems to be very, very comfortable for us.
Operator
Does that answer your question? I think you’re on-mute. No response? Yeah, sorry, since there is no response, we’ll move on to the next question from the line of Madhukar Lada from Nuvama Wealth Management. Please go-ahead.
Madhukar Ladha
Good morning and thank you for taking my question. First, what is the extent of price hike that we’re looking at? And this again gives me some fear that we may lose market-share as a result of you know, taking continuous price hikes. I think we’re taking a price hike on Family Health Optima. Last year, we had taken 25% on-top of it. Again, we are taking a price hike right now. So how are we going to contain that element? Also, can you also — maybe I missed this, what is the fresh business growth for nine months and for Q3, if you can give those two numbers?
And lastly, your loss ratios remain sort of elevated. So what is your expectation of the trajectory going-forward into ’26 and ’27. So some sort of a guidance of there could help us as to what sort of numbers we as management are probably — you as management are probably going to be looking at or are working with. Yeah, those would be my questions. Thank you.
Anand Roy
Hi, Madhukar, this is Anand here. See price hike is a reflection of the market reality, which for us mostly obviously driven by medical inflation. You know, as long as India continues to have a very-high medical inflation, insurance companies will have to keep pace with that. So this is not the first-quarter call as we have always mentioned. But even if you look at it, the annualized yield that we are targeting on every product price that we do is between 10% to 12%. So I think inflation is a reality and customers have to unfortunately pay for that and that is how we are planning our strategies. But we are very mindful of the sensitivity of this whole business. We know that retaining customers, making sure that they don’t feel aggreeved. So we have — we have also designed our pricing strategy in that manner so that most customers are — do not feel agrieved by this whole incident.
As far as FHO is concerned, yes, we had taken a price increase two years ago, but we have decided to take one more this year. So that will continue. As far as retail fish is concerned, we have grown at 22% on nine months on a GWP basis and 13% on NOP basis. So our strategy continues to be pushing both on the volume side and the value side-led growth, which will continue and we are very happy to see these numbers coming back on-track.
Madhukar Ladha
And on the loss ratio, what should be we sort of start thinking, how should we think about it over ’26, ’27, any like improvement numbers that we should target at?
Amitabh Jain
Yeah. So Madhukar, the price hikes have been taken and as we follow 1 by 365 method, the impact will be seen in the next 18 to 24 months. What’s more important is our claim rejection rates have gone down and our customer NPS has gone up. So we are very cognizant of the fact that how the customer service delivery can be enhanced in these times. Price hikes have been taken only to mitigate the medical inflation and this will continue going-forward too. So we will have to wait-and-see how it goes. The initial numbers, which when we have taken a price hike, the retentions have been good. So we don’t see any — any issue in our retention portfolio in the coming years.
Madhukar Ladha
Got it. Just one more if I could squeeze in one more question on the commission side. So I understand that the larger aggregators are still are not willing to accept your yearly commissions. And IRDI does not allow deferring of this cost. In — in that context, how have — how have we dealt with this? It seems that we’ve managed to convert this for ourselves to a sort of yearly commission payment mechanism. So, but I would like to hear your comments on that.
And second is, given this, do you see industry dynamics changing in any way because your — the OM AUM ratios for your competitors will then go up a lot more sharply than they would go up for yours. So does that help you in any way? Yeah. Thanks.
Anand Roy
So Madhukar, I think you answered the question yourself. The OM, the regulations do not put any cap on the payment of commissions. The accounting method for your gross written premium is what has changed. So on a case-to-case basis, we are — we are discussing with our partners and we are taking decisions based on what is beneficial to StarHealth. So yes, we do have some headroom on the UM side as compared to some of our peers and we will utilize it strategically wherever needed. Thanks.
Operator
Madukar. Thank you for your question. Yeah. We’ll take our next question from the line of Uday Pai from Investec. Please go-ahead.
Uday Pai
Yeah. Hello. Thanks for the opportunity. I have couple of questions. First one is, can you quantify the blended impact of the price hike that you have taken in FY ’25 on your total portfolio? And second would be, you had introduced premium discounting for customers with no claims. So a product such with that feature. So can you share what is the contribution of that product to GWP? And also if I can squeeze in last one, what would be the loss ratios in the banca channel? You mentioned that it is a high procurement cost channel, but can you also share the loss ratios in that channel? Those would be my question. Thank you.
Aditya Biyani
The price hikes that we have taken are in the range of 8% to 9% on a blended basis. In terms of banca channel, you know, we maintain a combined ratio target, which is below certain level. So very difficult to comment on the loss ratio, but these are very, very low loss ratios as these are attachment products which are very beneficial to the customers and in case of need these claims are paid out.
Uday Pai
Yeah, on the contribution of the no claims premium discounting product?
Aditya Biyani
So it’s introduced for one of the products which is 30% of our portfolio as of now.
Uday Pai
Thanks.
Operator
Thank you. We’ll take our next question from the line of Prakash Kapadia from Spark PMS. Please go-ahead.
Prakash Kapadia
Yeah. Thanks for the opportunity. If I were to look at nine months combined ratio is 10 1.8 versus 98.2%, this is largely due to higher loss ratios. And this quarter, we’ve seen OpEx and commission being higher, you partly alluded to the one by an impact which has started recently. So what I wanted to understand, we are already following one by 365. So what is the impact of one by N for us? And from here on, how does the trajectory of combined ratios should look-forward on a ’26 or near-term basis for us? Because we were already 1 by 365 in terms of revenue recognition. So with one, is the impact still there lesser? Are we better-off? If you could give some insights that will be helpful. Thank you.
Aditya Biyani
Okay. So when we calculate the loss ratio, it’s — the numerator is claims and the denominator is net earned premium. And hence for loss ratio purposes, the one-by-in change will not create an impact. When it comes to expense ratio, the denominator is net return premium. So while the NEP does not get impacted because of unbank, the net return premium does get impacted because GWP is going down. And hence the loss ratio looks to be — the expense ratio looks to be elevated by 1.6% for the quarter. So that on a like-for-like basis, we see that the expense ratio is flat.
Prakash Kapadia
Okay. So you’re saying for Q3, if I were to take this impact, it is higher by 1.6%.
Aditya Biyani
Yeah, because of the impact. Otherwise it is it — last year it was 30.3% expense ratio. Now it is 30.2%, which is flattish.
Prakash Kapadia
Yeah. Okay. And as we build the book and we are looking at growth coming forward from Q4 onwards. So what ideally should we look at the direction of — I’m not looking at a specific guidance, the direction of the combined ratios going-forward, how lower can there be some kind of a direction?
Aditya Biyani
See, Prakash, right now, when we started this year, we had given that we would like to double our top-line and work towards an IFRS path. Right now, at this critical juncture where there are so many regulatory and accounting changes happening, I think what’s more important is whether the segment is growing and we as retail players, whether the fresh business is going up or not. I think that is where the agency, the digital, the banca retail, everyone is focusing on it and our growth has been very, very good. In fact, our retail fresh growth has been almost in the range of 22 odd percent and followed by a very good volume growth. So more than anything, I think we should be focusing more on the IFRS path towards financial year ’28 and whether we can keep growing at the rate what we have envisaged, which is 18-odd percent reaching and doubling our top-line from financial year ’24.
Prakash Kapadia
Okay, thanks, sir.
Operator
Thank you. We’ll take our next question from the line of Deepanjan Ghosh from Citi. Please go-ahead.
Dipanjan Ghosh
Hi, good morning, sir. So just a few questions. First, when I look at your renewal premium growth that tends to be in the retail health side, my calculations say that it should be around the 10% to 13% range. And you also mentioned the blended price hikes that you have taken over the last nine months is around 8% to 10%. So broadly speaking, I just wanted to understand how has the retail persistency ratio has been holding up if I look at the number of policies. So that would be my first question.
My second, what I understand is in your group business, you have scaled-up the banca business over the past maybe eight to 10 quarters. And despite that, the claims is standing at like more than 80%. So just wanted to understand on the employed employee side, what would be the mix today in your group health and how has that segment really behaved, including large corporate and SMEs? And last question, one is on the — on the overall book, let’s say that you have originated post, let’s say, FY ’22 or maybe in the last 10 to 12 quarters, what would be the composition of this new book or the book with prudent pricing that is currently out there? Hello?
Aditya Biyani
Aim is to make sure customers continue to get the benefit of having a policy and do not fall-out of the franchise. On the banker side, there has been a slowdown in the PSU banks. You are aware of it, there has been multiple channel challenges on the bancassurance business in terms of regulatory interventions, in terms of oversight by the ministry on insurance sales in banks. So all of this has definitely affected the business growth in terms — than what we had planned. But we are very, very positive of the partners that we have. We continue to add new partners on the bancassurance space. And definitely, I think this is an area which we will keep focusing on.
On the group — group side, you had mentioned about — I had mentioned in my opening remarks is a small-business, it’s 4% of our portfolio, focusing largely on SME and mid-corporates. But yes, there has been a deterioration in the loss ratios on the group side for the industry and as well as for Star Health. So we are taking some corrective measures in terms of our pricing and selection of business so that this business can continue to be profitable in the long-run. Thank you.
Operator
Does that answer your question? Thank you. We’ll take our next question from the line of Karote from Jefferies. Please go-ahead.
Jayant Kharote
Yes. Thank you for the opportunity. First question is regarding…
Operator
Mr. Karote?
Jayant Kharote
Yes.
Operator
Can you go-ahead now, please?
Jayant Kharote
First question is regarding volume growth. If you could give us an — if you could quantify the volume growth for this quarter for the firm and for the nine months and how is that shaping up? I’ll come back with the second one.
Aditya Biyani
So volume growth, 50% continues to be volume growth for the first-nine months and 50% is the value growth that we are seeing. With the price increase which is effective December and Jan, we’ll see a higher proportion of value growth going-forward.
Jayant Kharote
But for the nine months, it is INR50 sir, can you just quantify the number for the quarter for the retail health?
Aditya Biyani
It’s around 7% volume growth and 7% is value growth.
Jayant Kharote
Great. And now coming to — yeah, on the claims side, so Vinillesh, I think one thing is clear that this claims is not a star issue, it’s a broader industry issue and over the last 3/4, it’s becoming more-and-more apparent. So a slightly longer-term question that how do we address this issue that there’s not dispersion of patients across hospitals? And of course, the issue of supply of the beds, right? We see a lot of PE investments coming in over the next but these hospitals take time to scale-up and mature. So what role can you as the market-leader play to sort of accelerate these hospital maturity cycles so that supply of beds increases and at least the severity can if not decline at.
Nilesh Kambli
So great question you know this is something that star and of course industry is really-really taking time to kind of, you know, get solutions and it is not one particular thing or one particular strategy that will work. But one of the things that you know we’ve been working with the GI Council is to get to discussion with the major hospital groups to agree on certain basic IT, for example, the way billing happens, you know, the kind of billing heads that get billed to customers and to insurers what could be the basic protocol for medical admissions because we’re seeing a heightened reach-out to have admissions of even for a very basic medical requirements like simple fevers and so on. So one is that.
Two is, of course you know-how we sort of combine as an industry to look at what we can do on getting you know, more awareness amongst customers to you know be more aware of wellness and health conditions and make that as a first port of call, right? In the long-run, ultimately a healthy customer-base will lead to a healthy portfolio. So those are some of the things that we are doing. Third is specifically star is going all-out to kind of use all the preventive measures that can be done. So for example, we’ve been running a program on containing readmission rates where we have seen a very appreciable movement of roughly a 20% reduction in readmissions that we’ve been driving post admission happens. So those are the kind of measures, 360-degree approach that we’ll have to take to kind of contain some of this. And of course, we’ve been talking to the government for a regulator for the hospital industry, which is I think very essential for some of these things to fall in-place. Thank you.
Operator
Thank you. Thank you ladies and gentlemen, we’ll take that as the last question for today.
I now hand the conference over to Mr Nilesh Kamli from Star Health and Allied Insurance Company Limited for closing comments. Over to you.
Nilesh Kambli
Thank you, everyone, for joining. So no, we are experiencing — experiencing a good growth in our retail business with expansion in our product and distribution profile. We are excited about quarter-four, which is the largest quarter in terms of the premium for us. With the pricing intervention taken in December and Jan ’25, the financials will continue to improve going ahead. Thanks for joining the call. Thank you very much.
Operator
Thank you. On behalf of Star Health and Allied Insurance Company Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.