If there was ever a compelling case for suitability-led selling in health insurance, this is it. Buried in the public disclosure documents of non-life insurers is a metric that offers important insights into how health insurance products are sold, bought and ultimately renewed, or not.
The NL-47 section of these disclosures, available on every insurance company's website, provides product-wise data on retention rates, complaints, claim settlement, incurred claims ratios, and combined ratios for every health insurance plan sold.
Mint analyzed the highest-selling retail health insurance product of each insurer for FY26 and found an unsettling trend: the simple average retention rate across insurers was just 73%, implying that roughly one in four policyholders did not renew the same product.
Customer retention has traditionally been viewed as a challenge for the life insurance industry, where misselling has often undermined persistency. Health insurance, by contrast, has largely escaped that criticism.
At its core, the proposition is simple: pay a premium today so that your hospital bills are covered tomorrow. Although health insurance is not free from complexity. The fine print can still catch policyholders off guard, and a poor claims experience can leave customers dissatisfied, leading to some dropouts.
But conversations with insurers and experts suggest lower product retention appears to be driven less by customer dissatisfaction than by distribution incentives, churn among younger customers, sharp price hikes and internal migration to newer products.
But before we dive into these aspects, it is important to understand what the data captures and what it does not.
Understanding NL-47
The retention figures disclosed under NL-47 are calculated at the product level. Insurers report the number of policies due for renewal during the year and the percentage that were actually renewed.
It further segregates the number of policies across the vintage, for example, the number of policies in its first year, policies that have completed a year but are less than three years old and so on. The retention figures, however, are one consolidated number and don’t provide a vintage-wise break-up.
It also does not distinguish between customers who renewed the same product, migrated to another product within the same insurer, ported to another insurer or exited the health insurance system altogether.
That distinction matters because a lower product-level retention rate does not necessarily mean an equivalent number of customers have lapsed health insurance. It only shows that they did not renew the same product. Mint spoke to insurers, distributors and experts to understand what may be driving these renewal patterns.
Does claims experience drive churn?
While it’s natural to assume that a poor claims experience could be the main cause of policyholder lapsing, according to Rachin Aggarwal, principal and senior consultant at Milliman, it should account for only a small fraction of policy churn.
“Of 100 insureds, depending on the product and portfolio, around 10-20 make a claim on average, and it's likely that only a small proportion of these would have a grievance because of a claim-handling related issue, so most lapsing will be for other reasons,” he said.
“Once you have made a claim, porting is not that simple. I would put this number at around 5%. Also, people who have claimed generally do not lapse because they understand the importance of health insurance and the lack of alternatives. So people lapsing because of a bad claims experience could be around 2%,” estimated G. Srinivasan, managing director and chief executive, Galaxy Health Insurance Co. Ltd and former chairman of New India Assurance.
The data broadly supports that view. Products with relatively higher complaint levels or lower claims settlement rates sometimes retain more customers than those with fewer complaints, making it difficult to establish a direct correlation between complaints, claims experience and retention.
Then what drives retention?
Customer demographics, sales-led churn, channel of sale, and internal migrations towards newer launches seem to be the real reasons, and most of this plays out during the early stages of the policy lifecycle.
For instance, ICICI Lombard General Insurance Ltd's Elevate, lauched in 2024, reported a retention rate of 74%. According to Priya Deshmukh, head of health products, operations, and services at ICICI Lombard, the ages of both the customer and the policy play an important role.
“Vintage and customer age play an important role in retention. The industry has observed a higher customer churn during the first year, particularly among younger policyholders. The reasons could range from not perceiving enough value in the policy due to the absence of claims to the overall customer experience,” she said.
But a high level of churn may not always be a result of customers shopping for better deals or lapsing due to the lack of claims. It may also be driven by incentive-led churn for higher commissions.
We spoke to insurers and intermediaries who confirmed the trend on condition of anonymity, since this practice is prohibited by the regulator.
Mitesh Dave, an independent insurance and investment consultant, however, offered an explanation. “Porting a policy during the first renewal is similar to fresh business, so the commission is not only payable but can be higher than renewal commissions. Although the nomenclature of this payout differs," he said.
But as the years go by, stickiness builds, and retention improves unless, of course, sharp pricing makes the plan unaffordable. According to Dave, sharp pricing revisions are also why policyholders shop for cheaper policies in the market and port, as they find little value in paying premiums in the absence of any claim.
Beyond sales incentives, sales channels also play a role, with bancassurance seeing relatively high lapses. Srinivasan attributed this to the nature of bank-led sales. “Bancassurance sales are often hard-push sales with very little handholding at the time of renewal. As a result, customers are more likely to lapse,” he said.
Internal migration is another factor. Here is an example: Zurich Kotak General Insurance Co. (India) Ltd's Health Premier reported a retention rate of 62% in FY26, partly because customers upgraded to Health360, a newer product launched in 2025. “Some of our Health Premier customers chose to upgrade to the new Health360 product, which offers several additional features compared with Health Premier,” the insurer said.
Why is the data noisy?
The disclosures offer a glimpse into several industry practices and trends, some of which could be detrimental to consumers. “While overall useful, porting when products aren’t significantly better is not in the policyholder’s interest,” said Kapil Mehta, co-founder and CEO, SecureNow Insurance Broker Pvt. Ltd.
According to Mehta, this is more evident in internal porting. “Most insurers allow internal porting only to select products, driven by their priorities and to improve their own economics. A perfect system would be one where internal porting is freely allowed across an insurer’s products,” he added.
At the same time, the disclosures have limitations that make comparisons difficult. First, they report retention only at the product level, making it impossible to determine how many customers remained with the insurer after migrating to another plan.
Insurers cannot rely indefinitely on internal migration to sustain business, according to Shreeraj Deshpande, an insurance consultant. “Fresh business acquisition always needs to outpace the renewal book. Insurers cannot focus only on internal migration because that is effectively renewal business. If that continues, it puts pressure on pricing as the book matures,” he added.
Second, product vintage can be misleading. The date of launch is not the first time the product hit the market, but the date of refilling the product, making like-for-like comparisons difficult.
Third, reporting methodologies differ. ManipalCigna reported a retention rate of 103% for its Lifetime Health plan after including policies that migrated to the product while calculating renewals.
And finally, a very important one, Mint found errors in some public disclosures that insurers later corrected after these were pointed out.
What does this mean for customers?
Product-level disclosures are an important step towards greater transparency, but the data should be interpreted with caution. Conversations with insurers and experts point to one recurring theme: portability is increasingly being used to move customers between products. While this may sometimes offer better benefits, it does not always necessarily work in the customer's interest.
At its core, a health insurance policy exists to pay your medical bills. Additional features, wellness benefits and value-added services should be weighed carefully against the premium you pay. There is also no guarantee that a cheaper policy today will remain cheaper after future price revisions. So, unless the additional benefits are meaningful or the price difference is substantial, customers should carefully evaluate their decision to switch.