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Niva Bupa Health Insurance posted an operating loss of around ₹62 crore for the second quarter this fiscal against an operating profit of ₹58.47 crore for the same period last fiscal. What were the factors that contributed to it? The operating loss is largely driven by an accounting change rather than business performance .From October 1, 2024, multi-year policies are required to be accounted for on a 1/n basis under I-GAAP. While claims and expenses remain unchanged, the reported earnings for the quarter are lower due to this transition. On the other hand, under IFRS—where both premium and acquisition costs are amortised over the policy term—our underlying performance is clearly visible. On an IFRS basis, our net profit for Q2 more than doubled to ₹62 crore, compared to ₹24 crore in the same quarter last year. India is moving towards Ind AS, which mirrors IFRS, so this will become the standard from April 1, 2027. We are already reporting under both I-GAAP and IFRS, and the IFRS numbers reflect the true business momentum. Expenses of Management (EoM) ratio fell to 36.3 per cent for the first half of this fiscal from 40 per cent in the same period of last fiscal. When does the company expect to meet the regulatory EoM ratio guidelines? We have improved our EoM ratio by 3.7 percentage points between H1 FY25 and H1 FY26, and we are very confident of meeting the regulatory threshold for the full financial year. The limit is 35 per cent with an additional allowance for insurtech and insurance awareness expenses, taking the effective cap to about 35.8 per cent. Our overheads have grown in single digits, while premiums have grown by 23 per cent in H1 (on a non-1/n basis). With premiums growing faster than expenses, economies of scale are kicking in. Over the last three years, we have consistently seen a 150–200 bps improvement annually. The trajectory remains strong and sustainable. Under IFRS, overall loss ratio in H1FY26 witnessed a 100 basis points year-on-year increase to 66 per cent. What caused the loss ratio to rise? The increase is primarily due to business mix. Retail loss ratios remain stable—60 per cent in H1 last year versus 60.1 per cent this year, a negligible shift of 10 basis points. The rise has come from the Group segment due to mix changes, although even there, the loss ratio remains at a comfortable level. Importantly, the higher loss ratio has been offset by a more than 200 bps reduction in expense ratio. As a result, our combined ratio improved to 103 per cent in H1 FY26 from 104 per cent in H1 FY25. If this trend continues, which we expect, combined ratios should soften further. During the results conference call, the management said the company has fully passed on the GST input tax credit (ITC) impact to its distributors. What has been the reason behind this move? The GST impact affects us in two areas—overheads and commissions. We have chosen to absorb the ITC loss on our overheads and offset it through other levers such as GST reduction on pharmacy, and volume growth. We are not passing this part on to distributors. However, we have passed on the GST impact related to commissions, as we believe this is the fairest way to distribute the impact. Some players may take a different stance based on their commission levels, but our approach is anchored in value creation and fairness across the ecosystem. While commission rates on a single policy may appear lower, the overall income opportunity for distributors remains strong. With higher volumes and improved persistency, the absolute income should more than compensate any impact on GST. We intend to stay consistent with this strategy going forward.
