Star Health's retail policy base grew by more than 11 percent between October 2025 and August 2026, against about 2 percent in the year before, and the average sum insured on fresh retail indemnity policies rose by about Rs 1.4 lakh to Rs 13.7 lakh, the insurer said on September 27. The period covers the eleven months since GST on individual health insurance premiums went from 18 percent to zero with effect from September 22, 2025.
Whole-time director Himanshu Walia told PTI the reform had made protection more affordable, with wider participation across age groups and geographies and customers choosing higher protection. Buyers aged 26 to 50 accounted for more than 80 percent of net policy additions, and the insurer reported more new-to-insurance customers and greater penetration in tier II, III and IV markets.
Context: what the exemption did, and what it did not
The rate cut was part of the government's indirect tax rationalisation announced on September 22, 2025, and it removed tax from the premium rather than from the product itself. IRDAI has not yet published sector-wide growth numbers for the period, so one insurer's portfolio is the first concrete read on whether a lower price meant more cover. The comparison is also against a weak base: growth of 2 percent in the year-ago period means the 11 percent is measured against flatness, not against a boom, and a single insurer can gain share from pricing, agency expansion or channel shifts as easily as from new demand.
Two things the tax cut cannot do. It cannot make a sum insured adequate, and it cannot change how a claim is assessed. Both of those still decide whether a policy pays.
Implication
- The average cover rising to Rs 13.7 lakh is the more important number. A policy bought at Rs 5 lakh is exposed against a major hospitalisation in a metro. An average that moves up Rs 1.4 lakh in a year suggests buyers are responding to a lower price by taking more protection, which is the outcome the exemption was meant to produce.
- The 26 to 50 pattern is encouraging and a warning at once. Working-age buyers adding cover is exactly right, but that is also the age at which pre-existing conditions and waiting periods start to matter. Cover bought now earns its value only if it is held and renewed without a break.
- One insurer is not the market. Treat this as a leading indicator and wait for IRDAI's sector data before concluding the exemption has closed the coverage gap. The evidence that would settle it is sector-wide growth and average sum insured for the same eleven months.
- Zero tax is not a reason to over-insure, and not a reason to under-insure either. A zero rate makes cover cheaper; it does not make claims easier to win. Room-rent limits, waiting periods and exclusions still govern outcomes.
Action
If your health cover has not been revisited since September 2025, redo the arithmetic now: what a bed in your city costs, what your policy pays after room-rent limits, and whether Rs 5 lakh or Rs 10 lakh survives a two-week ICU stay. Renewing at an unchanged sum insured while the same money buys more premium is the one move the exemption makes expensive not to take. If you bought a fresh policy after September 22, 2025, check that the quoted premium is the earlier price less the full 18 percent, rather than a revised number that keeps part of the difference.
Watch item: IRDAI's sector-wide growth and average sum insured data for the period, and the next GST council review, because an exemption without a review date can be reversed in a budget.