KOCHI: India’s leading standalone health insurers are sitting on investment portfolios that are larger than what they collect in premiums in a full year — an unusual feature that highlights how important investment income has become to their financial health.
The investment portfolios of the major health insurers have grown to levels where, in several cases, they exceed the company’s annual gross written premium (GWP). This does not mean insurers have invested more than they have collected over their lifetime: investments are an accumulated stock built up over several years, while premium is an annual flow.
But the comparison throws up an important question: how much of an insurer’s profitability is coming from underwriting insurance risk and how much is being supported by the returns on the money it has accumulated?
Star Health and Allied Insurance, the country’s largest standalone health insurer, had investments of about Rs20,012 crore at the end of FY26, against gross direct premium of around Rs18,606 crore during the year. Its investment income stood at about Rs1,228 crore.
Niva Bupa Health Insurance had an investment portfolio of about Rs9,670 crore, compared with FY26 gross written premium of around Rs8,586 crore. Its investment income was about Rs627 crore. The insurer, however, continued to face pressure on its core insurance business, with an underwriting loss of around Rs466 crore.
Medical inflation
Care Health Insurance also had investments of roughly Rs10,944 crore, against annual premium of about Rs9,805 crore. Investment and other income contributed about Rs685 crore, helping the insurer offset a loss from its insurance operations. Its operating loss was around Rs151 crore, while it nevertheless ended FY26 with a small profit of about Rs12 crore.
The picture is particularly significant because health insurance is a business where underwriting profitability can be difficult to sustain. Medical inflation, rising hospitalisation costs, intense competition and claims volatility can put pressure on margins even when premium growth remains strong.
Investment income therefore provides an important cushion.
Aditya Birla Health Insurance, for instance, reported gross written premium of about Rs6,855 crore in FY26, registering growth of around 39 per cent. Yet its combined ratio remained above 100 per cent, at about 103 per cent, indicating that claims and operating expenses continued to exceed premium income.
The implication is not that health insurers are primarily investment companies. They are required to maintain substantial investments against their insurance liabilities and must follow regulatory requirements governing the deployment of policyholders’ funds.
But the numbers underline a less obvious feature of the health insurance business: the longer an insurer operates and the larger its premium pool becomes, the larger the investment corpus it can build — and the greater the contribution that investment returns can make to the bottom line.
Investment income
This creates a financial dynamic that is easy to miss when looking only at premium growth.
An insurer may report rapid growth in premiums while still struggling to make money from underwriting. Investment income can then help bridge the gap between operational losses and overall profitability.
That raises a broader question for policyholders and investors alike: when an insurer reports a profit, how much of that profit is being generated by selling insurance and managing claims efficiently, and how much is coming from investing the money accumulated from policyholders?
For the fast-growing health insurance industry, that distinction is becoming increasingly important.
The numbers suggest that health insurers are not merely in the business of collecting premiums and paying claims. They are also becoming substantial investment managers — with investment portfolios sometimes larger than a year’s entire premium pool.
