Niva Bupa Health Insurance Company Ltd Management Discussions

Macro-Economic Environment & Health Insurance Industry

Indian Economy

The financial year 2025 marked another strong chapter for the Indian economy. It continued to outpace global peers and consolidate its position as one of the worlds largest and fastest growing major economies. GDP growth is projected at 6.5%i, supported by resilient domestic demand, a revival in private investments, and sustained government spending on infrastructure. Private Final Consumption Expenditure (PFCE) is expected to grow by 7.6%i in 2024–25, compared to 5.6% in the previous year, reflecting stronger consumer sentiment and rising household spending power. Inflation is likely to remain within the Reserve Bank of Indias target range, aided by prudent Monetary Policy. The Governments focus on capital expenditure and Production Linked Incentives (PLI) continues to drive manufacturing growth while steering the economy towards digitalization and sustainability, supported by advances in fintech and artificial intelligence.

Global Economy

The Global Economy in the financial year 2025 navigated a challenging macroeconomic landscape marked by trade disruptions, geopolitical tensions, and energy market volatility. Growth is forecast to stabilize at 3.3%_, with advanced economies adjusting to structural changes in labor markets and accelerating transitions toward low-carbon energy systems.

Emerging markets, particularly in Asia, continue to demonstrate resilience, supported by strong domestic demand and rapid digital adoption. Central banks across the world remain focused on striking a delicate balance between containing inflation and supporting economic recovery.

In this context, Indias robust economic performance stands out, underscoring its increasing ability to decouple from global headwinds and reinforcing its role as a key driver of the next phase of global economic expansion

Indian Insurance Industry

The Indian insurance market witnessed steady growth and significant transformation in the financial year 2025 with the industry expanding 6.2% over last year to 3.08 lakh crore. The health insurance segment (including personal accident) emerged as a key growth driver, commanding the largest share of the insurance industry with 41.4% of the total market. In FY25, the segment grew by 9.1% to 1.27 lakh crore.

As of the financial year 2025, group health insurance (which provides coverage to a group of individuals, typically employees of company) and retail health insurance (which offers individual policies purchased directly by individuals or families from insurance companies) businesses represent approximately 85% of the overall health (including PA) insurance GDPI.

Notably, health insurance has recorded the fastest growth among non-life segments, with a CAGR of 16.5% between FY19 and FY25, significantly outpacing the overall non-life insurance market which grew at a CAGR of 10.5% over the same period.

Standalone Health Insurance Companies or SAHIs are emerging as key players in the Indian Health insurance landscape capturing a market share of 30.2% in the financial year 2025, up from 28.4% in the financial year 2024. Notably, they dominate the Retail Health Insurance segment, accounting for 57.6% of the market.

The outperformance of the health insurance industry is driven by several factors, including growing awareness of insurance as a safeguard against rising medical costs, the increasing prevalence of lifestyle-related chronic conditions, and enhanced a_ordability through tailored and flexible products from specialized players. Medical inflation in recent years has further shifted public perception, transforming health insurance from a discretionary "good to have" into a critical "must have" financial safeguard.

Indias young workforce, with a median age of just 29.5 years and a dependency ratio projected to be around 0.4 by 2030, creates a potent demographic dividend that drives economic growth and rising disposable incomes. Per-capita GDP has climbed from approximately US$1,380 in 2010 to an estimated US$2,731 in 2024, and is expected to reach US$3,264 by 2026. As more Indians enter the middle-income bracket, with roughly 58 crores projected by 2030, they channel this increased spending power into financial protection, especially health insurance.

Supporting this momentum, the Insurance Regulatory and Development Authority of India or IRDAI is actively working towards its ambitious goal of "Insurance for All" by 2047. The Regulator is introducing progressive reforms aimed at broadening access, fostering innovation and strengthening consumer protection, thus creating a conducive environment for the growth of the health insurance sector.

Regulatory Developments During The Year

In the last financial year, the Insurance Regulatory and Development Authority of India ("IRDAI") has continued to take significant steps to improve the accessibility and inclusivity of health insurance, with a particular focus on senior citizens. One of the key regulatory changes mandates that all insurers must offer at least one product without any upper age limit, addressing the previous norm where most policies capped eligibility at 65 years. This reform ensures that senior citizens and individuals above the traditional age limit now have more coverage options.

Further, the IRDAI has introduced a series of customer-centric measures, including:

-Reduction in waiting periods for pre-existing diseases

-Mandatory coverage for high-risk individuals

-Customized plans for specialized groups

-Inclusion of AYUSH treatments without sub-limits

-Clear reimbursement guidelines for out-of-network services These initiatives not only align with the regulators ambitious vision of "Insurance for All" by 2047, but also encourage greater product innovation and inclusivity across the industry.

To foster innovation, the regulatory sandbox framework has undergone a transformation. Now more principle-based, the new structure supports greater flexibility and cross-sector collaboration through the Inter-Regulatory Sandbox, enabling integrated financial solutions, shared insights, and innovation that spans multiple financial domains. This shift is aimed at enhancing operational efficiency, encouraging experimentation, and improving ease of doing business within the insurance ecosystem.

In parallel, the IRDAI has implemented stringent data governance requirements to strengthen privacy and security. Insurers are now required to adopt comprehensive data governance frameworks and maintain robust electronic records with high-level security protocols.

These reforms reflect the IRDAIs role as a forward-thinking regulator that is committed to balancing inclusive insurance access with sustainable industry growth.

Revised Accounting Treatment for Long-Term Premiums

The Insurance Regulatory and Development Authority of India ("IRDAI") has introduced a significant change in the way non-life insurers, including health insurance companies, are required to account for long-term policy premiums. Effective October 1, 2024, the revised regulatory framework mandates that premiums & commission for long-term policies be recognized over the duration of the policy, rather than being fully booked upfront at the time of issuance.

As a result, insurers will now recognize and report only one years premium at a time, even for multi-year policies. This marks a departure from the earlier practice, where the entire premium amount was accounted for in the year of issuance, leading to inflated short-term revenue figures. While this change is expected to moderate the industrys reported Gross Written Premium (GWP) figures in the near term, it is a welcome move that aligns with global accounting standards and promotes greater transparency and consistency in financial reporting. We believe this change will lead to a more accurate reflection of annual business performance and facilitate better comparability across reporting periods.

As a company, we are fully aligned with this regulatory directive and have taken the necessary steps to ensure a smooth transition in our accounting practices.

Outlook

The Indian health insurance industry is at a pivotal juncture, poised for both significant market expansion and deeper market penetration. This momentum is being driven by a combination of progressive regulatory reforms, growing consumer awareness, and the rising cost of healthcare, all of which have positioned health insurance as a critical financial safeguard.

In FY25, the industry witnessed a notable increase in premium rates, in line with the surge in medical costs. While this has impacted a_ordability to some extent, it has also heightened consumer realization of the indispensability of health insurance. We do see a rise in wellness-linked insurance products as more and more consumers understand the need for preventive care over reactive. Features like premium discounts for healthy lifestyles, health checkups, coverage for modern and AYUSH treatments will find their way into health insurance offerings. One of the most promising developments is the proposed composite license framework, which would enable insurers to offer multiple lines of business under a single entity. This reform could be a game-changer, allowing greater participation from private players, improving operational efficiency, and expanding the overall insurance footprint.

On the regulatory front, the 18% GST on health insurance premiums remains a key a_ordability challenge. With inflationary pressures mounting, a rationalization of GST rates could significantly improve penetration, especially among underserved and price-sensitive segments. Meanwhile, the proposal to allow 100% foreign direct investment (FDI) in the insurance sector could unlock new capital inflows, attract global players, and enhance competition — ultimately benefiting consumers through better products and services.

The growth trajectory of the industry is evident: Gross Direct Premium Income (GDPI) from health insurance has more than doubled, rising from 51,000 crore in FY19 to 1.27 lakh crore in FY25, reflecting a robust CAGR of approximately 16%. In a demographically young country like India — where disposable incomes are rising and health awareness is improving — this growth is not only sustainable but expected to accelerate further.

Opportunities and Threats

The Indian health insurance sector is currently navigating a transitional phase, marked by evolving regulatory frameworks, technological integration, and a shift in consumer expectations. As an industry participant, we believe the following opportunities and threats will shape the landscape in the coming years:

Opportunities

Strong Regulatory Support and Innovation Enablement

The Insurance Regulatory and Development Authority of India ("IRDAI") continues to play a proactive role in encouraging product innovation. Initiatives such as the regulatory sandbox framework provide insurers with a structured environment to test new products and services, fostering innovation and agility. Additionally, the standardization of health insurance policies under AB PMJAY and the planned rollout of Bima Sugam, a centralized digital health insurance marketplace, are expected to enhance transparency and drive penetration, particularly in underserved and rural regions.

Favorable Regulatory Proposals

The proposed regulatory reforms, including the introduction of a composite license regime and the potential increase in the FDI cap to 100%, are likely to attract new players and capital into the industry. These changes could drive market consolidation, encourage diversification of offerings, and facilitate expansion into adjacent lines of business.

Low Insurance Penetration and Rising Awareness

Despite growing awareness, insurance penetration in India remains low. According to IRDAIs Annual Report for FY2023–24, overall insurance penetration declined slightly to 3.7% in 2023, down from 4.0% in 2022. However, with rising per capita income, ongoing financial literacy campaigns, and an increasingly health-conscious population, there remains a vast untapped market, particularly among over 100 crore uninsured individuals. This presents a long-term growth opportunity for the sector.

Threats

Cybersecurity and Data Privacy Risks

The industrys growing reliance on digital platforms, cloud services, and data analytics has significantly increased exposure to cybersecurity threats. Ensuring the protection of sensitive customer data is paramount to maintaining consumer trust and regulatory compliance. The potential for data breaches and cyberattacks poses a serious operational and reputational risk.

Rising Healthcare Costs

The continued escalation in medical treatment costs directly impacts claim outgo, thereby putting pressure on underwriting margins. Balancing a_ordability for consumers while maintaining pricing sustainability and profitability remains a key industry challenge.

Fraudulent Claims and Provider Malpractices

Health insurers are increasingly encountering fraudulent claim activities, including false or inflated medical claims by both policyholders and healthcare providers. In particular, irregular pricing practices by hospitals, especially in the cashless claims ecosystem, continue to be a concern. These practices result in financial losses, impact claims ratios, and threaten the integrity of the insurance system.

Segment wise or product wise performance

The Company offers a comprehensive and innovative portfolio of health insurance solutions, thoughtfully designed to support customers across every stage of their life journey.

The Company has developed products tailored to diverse income segments. Offerings such as Premia and ReAssure 2.0 are crafted to meet the unique needs of the HNI and a_uent customer base, delivering enhanced protection and premium benefits. While Rise - a flexible and rewarding health insurance product that offers customised coverage - is meant for the middle-class Indians or the "missing middle". To cater to individuals and families across the age spectrum, products like Aspire, to unlock the untapped potential of the Young India market and Elixir are designed for with a specific focus on the millennial and Gen Z demographic, while Senior First addresses the healthcare needs of senior citizens.

Around 67% of the Companys business comes from retail products and group business accounts for 33% of the overall GDPI.

Risks

Health insurers must navigate a range of risks to maintain financial stability and operational effectiveness. Here we discuss what those risks are and how the company solves for those.

1. A primary concern is underwriting risk, where inaccurate premium pricing leads to unsustainable claims payouts, which can be addressed through predictive modelling and risk-sharing agreements like reinsurance. The companys proprietory digital stack helps carry out underwriting and risk-based pricing. A significant mitigating factor is that most business written is for short-term risks, which enables regular opportunities for re-pricing in the event of changes in claims trends or market conditions.

2. Fraudulent claims from both members and providers create significant financial losses and administrative burdens. Evolving healthcare regulations means more continuous compliance monitoring to be aware and follow changes and adapt to them. Escalating medical costs are managed through provider network negotiations, preventive health initiatives, and adjusted member cost-sharing structures.

Trigger-based and randomized reviews are used to identify high-risk billing patterns and potential anomalies. Real-time outlier detection flags suspicious claims based on parameters such as disease, geography, treatment provider and policy seller.

3. Cybersecurity & Data related risks are inherent as insurers manage vast amounts of sensitive personal health data vulnerable to breaches and hacks. To tackle this risk, the company ensures sufficient capacity and solution deployment to mitigate/ minimise cyber risk, promotes resilience, periodic drills for ensuring business continuity and cyber security crisis management. The company has automated security activities and regularly monitors it.

4. Brand reputation is highly dependent on transparent policies, efficient claims resolution, and responsive customer service. These have a high impact on the customers perception of the company and any deficiency in the same poses a concern of poor customer experience. The company follows regular monitoring of risk-based points to actively identify and assess the possibility of any risk that might be forthcoming and to take any mitigation steps proactively to reduce the risk of any material impact. More on the initiatives and actions by the company can be found in the Risk Management Strategy section of this report

Company Performance

The Company is the 3rd largest and among the fastest-growing standalone health insurers among SAHIs. The Company has a 9.4% market share in retail health segment for the financial year 2025. The Company has over 2 crore customers supported by a robust network of 10,000+ hospitals and a strong distribution footprint of 200+ branches, 1.8 lakh+ individual agents, and 8,900+ employees.

The Company continued its solid growth trajectory posting a growth of 32.1% (without 1/N) in FY25. The industry beating growth led to a bump in the market share by 27 bps. The increase in combined operating ratio is majorly driven by the

Snapshot of Niva Bupa for the year ended 31st March 2025

	FY23	FY24	FY25
GWP	4,073.0 cr	5,607.6 cr	6,762.2 cr
NWP	3,183.1 cr	4,421.0 cr	5,369.4 cr
PAT (IGAAP)	12.5 cr	81.9 cr	213.5 cr
Combined Ratio	97.1%	98.8%	101.2%
Assets Under Management	3,366.1 cr	5,458.2 cr	8,175.1 cr
Yield on Total Investments	6.7%	7.1%	7.4%
Return on Average Net Worth	1.9%	5.7%	8.4%
Retail Health Market Share	8.4%	9.1%	9.4%
Avg. Ticket size per policy	26,084	28,797	30,252
Claims Settlement Ratio	90.5%	91.9%	92.4%

loss ratio which stood at 59.0% in last financial year and 61.2% in current financial year. Without the "1/N" impact, the combined ratio for FY25 is 96.1% with an improvement of around 270 basis points from FY24, of which 80 bps is coming from improvement in loss ratio and 190 bps from improvement in expense ratio on like-to-like basis. The Company adopts a multi-channel & diversified distribution with emphasis on digital sales.

Bancassurance

The bancassurance channel has booked premiums worth 1,359 crores, up 24% from FY2024. The company has added 7 new bancassurance partners during the financial year.

Brokers

Broker channel is the biggest contributor to the companys premiums earned, bringing in about 31% of the premiums. Around 6.88 lac insurance policies were sold via the broker channel and premiums of around 2,071 crores were booked, up 37% from last year.

Agents

The company continued to add on to its agents network which grew by 26% at 1.80 lacs. Premiums booked grew by 12% at 2007 crores.

The Company has a digital-first approach and strives to create a digital ecosystem that is customer friendly. Digital self-serve capabilities allow the entire value chain to be free of human interaction. 99.9% of new policies have been applied via website and mobile apps, 88.3% of policy renewals are done without any human intervention

Claims

The Company received 10,28,339 claims during the year as against 7,04,615 received previous year, an increase of around 46% on account of health claims. Including the claims outstanding at the beginning of the year the company settled 9,44,079 claims, thereby increasing in the claims settlement ratio at 92.4% in FY25. The number of claims outstanding as on FY25-end stood at 21,861. 91.5% of the claims have been digitally submitted during FY25.

Investments

The Company makes investments following the Regulations laid down by IRDAI (Actuarial, Finance and Investment functions of Insurers)Regulations, 2024, Insurance Act, 1938 and the Board Approved Investment Policy. The Investment Committee strives for optimum portfolio returns while maintaining adequate liquidity.

The book value of the Companys investment portfolio as on 31st March, 2025 stood at 8178.15 crores. 30.3% of the portfolio comprises Central and State Government Securities

Solvency

The Companys solvency ratio strengthened to 3.03x in FY25 from 2.55x in FY24, demonstrating sound financial stability and ability to meet long-term obligations.

Grievance Redressal

The Companys Grievance Management Policy is formulated and reviewed regularly with the aim to define effective grievance redressal procedure and mechanism to resolve complaints and grievances of policyholders, claimants efficiently and with speed. The Company has set up a Policyholder Protection Committee (PPC), reporting to the Board. Grievance Resolution trends are reviewed and monitored quarterly.

Grievance disposal for the period upto March 31, 2025

Quarter	Jun 24	Sep 24	Dec 24	Mar 25
Opening balance as on beginning of the quarter	21	130	144	111
Additions during the quarter	1.272	1,817	1,684	1,555
Complaints resolved/settled during the quarter
Fully accepted	357	441	394	358
Partially accepted	321	548	534	480
Rejected	485	814	789	804
Complaints pending at the end of the quarter	130	144	111	24
Total complaints registered upto the quarter during the financial year	1,272	3,089	4,773	6,328

Details of significant changes in the key financial ratios

(i.e. change of 25% or more as compared to the immediately previous financial year), alongwith detailed explanations thereof:

Ratios	FY24	FY25	Change	Reasons, if any
Debt-Equity Ratio (No. of times)	0.12	0.08	(33%)	Debt-Equity ratio has reduced on account of increase in net worth during the financial year 2025.
Interest Service coverage Ratio (No. of times)	4.06	8.98	121%	Interest Service Coverage ratio has increased on account of increase in profit before interest & tax during the financial year 2025.
Current Ratio	0.17	0.23	35%	Current ratio has increased on account of increase in current assets & current liablilities during the financial year 2025.
Debtors turnover	N/A	N/A	N/A	Not Applicable
Inventory turnover	N/A	N/A	N/A	Not Applicable
Operating Margin	N/A	N/A	N/A	Not Applicable
Net Profit Margin	N/A	N/A	N/A	Not Applicable
Sector Specific Relevant Ratios
Operating Profit Ratio	4.93%	3.68%	(25%)	Refer Note 1
Net earnings ratio	1.85%	3.98%	115%	Refer Note 2
Gross Direct Premium Growth Rate	37.68%	20.59%	(45%)	Refer Note 3
Expense of Management to Net Written Premium Ratio	49.86%	49.39%	(1%)	Not Applicable
Underwriting balance ratio (No. of times)	(0.05)	(0.05)	(1%)	Not Applicable

 

Sector Specific Relevant Ratios	FY24	FY25	Change	Reasons, if any
Net Commission Ratio	16.92%	19.83%	17%	Not Applicable
Liquid Assets to liabilities ratio (No. of times)	0.18	0.26	45%	Refer Note 4
Gross Direct Premium to Net worth Ratio (No. of times)	2.74	2.21	(19%)	Not Applicable
Technical Reserves to net premium ratio (No. of times)	0.59	0.60	1%	Not Applicable
Growth rate of Net Worth	146.6%	49.22%	(66%)	Refer Note 5
Return on net worth ratio	3.99%	6.98%	75%	Refer Note 6

Note 1: The operating profit ratio has reduced on account of lower growth in gross written premium during the financial year 2025 as compared to financial year 2024 pursuant to recognization of gross written premium on a 1/n basis where "n" denotes the policy duration and commission expenses paid and commission income accrued on such recorded gross written premium for applicable long-term products, in accordance with the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulation, 2024

Note 2: Net earning ratio has increased on account of increase in profit after tax during the financial year 2025.

Note 3: Gross direct premium growth rate has reduced on account of lower growth in gross written premium during the financial year 2025 as compared to financial year 2024 pursuant to recognization of gross written premium on a 1/n basis where "n" denotes the policy duration and commission expenses paid and commission income accrued on such recorded gross written premium for applicable long-term products, in accordance with the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulation, 2024.

Note 4: Liquid Assets to liabilities ratio has increased on account of increase in short term investments and cash & bank balances during the financial year 2025.

Note 5: Growth rate of Net worth has reduced on account of decrease in networth (YoY) during financial year 2025 as compared to the financial year 2024.

Note 6: Return on Net worth ratio has increased on account of increase in profit after tax & net worth during the financial year 2025.