Standalone health insurance market nearly doubles even as Star Health’s dominance halves in 5 years to 32%

Star Health and Allied Insurance Company

Star Health and Allied Insurance Company Ltd, once the undisputed leader in the standalone health insurance (SAHI) segment, has seen its market dominance erode sharply, with industry experts attributing the decline to its heavy reliance on the retail health segment and limited presence in group insurance.

Its market share has nearly halved, from around 60 percent in FY21 to just 32 percent by Q2 FY26, even as broader SAHI sector has expanded rapidly from roughly Rs 63,700 crore in FY21 to Rs 1,18,688 crore in FY25, an increase of about 86 percent.

Star Health and Allied Insurance Company's market share declined over the last 5 years

The key reason for the decline in market share of Star Health in the SAHI space seems to lie in how its portfolio has evolved, according to experts.

The contribution of the group and SME segment for Star has dwindled from 10 percent in FY21 to just about 5 percent in FY25, according to the company’s filings. Its retail segment, as a result, has increased with the company relying almost entirely on retail health insurance, which contributes around 95 percent of its business, with only about 5 percent coming from its SME-focused group portfolio.

During the Q2 FY26 earnings call held on October 29, 2025, Managing Director Anand Roy said the company deliberately scaled back its group book as loss ratios in corporate accounts rose, in a bid to improve underwriting quality and reduce exposure to loss-making corporate accounts.

This shift towards its retail segment, according to experts and online reports, may have hurt Star Health’s ability to capture new market opportunities.

"While this change has improved underwriting quality and operating performance in the near term, it may have significantly reduced the insurer’s exposure to a major part of the market’s expansion," experts noted.

Until FY21, Star Health maintained a relatively balanced portfolio - retail contributed roughly 88-90 percent of its premium income, while group health products accounted for the remaining 10-12 percent. However, profitability concerns in the corporate group segment prompted a strategic exit.

Reflecting this shift even further, Star Health’s gross premiums as a share of total SAHI premium collections also dropped steeply to 44 percent as of FY25 down from 60 percent in FY21.

Peers stay diversified, tap SME and corporate demand

Meanwhile, other players in the market such as Niva Bupa Health Insurance and Care Health Insurance have maintained a more balanced exposure by actively expanding in the SME and mid-corporate group segment.

Niva Bupa, which reported gross written premiums (GWP) of around Rs 5,000 crore in FY24, has also built a significant SME portfolio through tie-ups with mid-sized corporates and industry associations, though it does not disclose a precise breakdown.

Care Health Insurance’s share of the group health segment rose from 1.7 percent in FY18 to more than 5 percent as of Q2 FY26, suggesting that it may be capturing a larger slice of this growing pool.
In contrast, Star Health’s near-exclusive focus on retail may have made its growth more sensitive to competition and price wars, while missing out on the relatively stable growth that SME and corporate portfolios can offer.

This segment typically covers health policies purchased by small and medium enterprises for their employees, offering insurers access to a steady pool of premium-paying customers without the volatility associated with large corporate or government group accounts.

According to experts cited above, this diversification gives these insurers a broader risk spread and stronger access to long-term institutional clients.

"SME or mid-corporate group health businesses, typically covering employees of smaller enterprises or associations, help insurers generate steady premium inflows and cross-sell other products. They also provide scale advantages without the high claim volatility of large-corporate portfolios," they said.

By stepping away from these segments, Star Health may have limited itself to the retail lane, a space now teeming with competition from both standalone and diversified insurers.

New entrants and aggressive expansion

Meanwhile, the overall SAHI space has also seen intensified competition, with both new entrants and existing players expanding their footprints.

In recent years, several insurers such as Niva Bupa, Galaxy Health, and Narayana Health have entered the SAHI market, aggressively scaling their presence in the retail segment.

Care Health, for instance, has tripled its gross premium base to Rs 8,135.35 crore, boosting its market share from 15 percent in FY21 to 22 percent in FY25 in the SAHI space. Niva Bupa's gross premium base rose from Rs 2,810 crore in FY21 Rs 6,672 in FY25, increasing its market share from 11.2 percent to 17.5 percent in FY25.

Galaxy, although a relatively new entrant in the SAHI space, has also been expanding with its Gross Premium in Q4 FY25 at Rs 1,228 crore up from Rs 231 crore in Q3 FY24.

Big growth bet

Despite these challenges, Star Health remains optimistic about its growth trajectory. Speaking to the media, the company has outlined an ambitious roadmap to double its gross written premium (GWP) to Rs 30,000 crore by FY28, compared with around Rs 17,500 crore in FY25.

CEO Anand Roy told the media that the company is targeting about Rs 20,000 crore in GWP for FY26 and is on track to achieve that.