Chennai-based Star Health and Allied Insurance has a 33% market share in retail health insurance. It has 91% of total health gross written premium (GWP) for retail business, which has grown at a CAGR of 23% over the last 5 years. Anand Roy, its 49-year-old MD and CEO, tells Business Today, about how he plans to triple the insurer’s profits to Rs 2,500 crore by FY28. Edited excerpts:What is your strategy for tripling profits over the next four years? At Star Health, we follow a fourpronged “ABCD” growth strategy: A is for agency. Star Health has a vast network of 760,000 agents and intends to take it to 1 million agents in the next three years. Currently contributing 80% of the company’s business, agency sales continue to be a primary focus especially on increasing insurance penetration in non-metro cities and towns. B is for bancassurance. Partnerships with approximately 70 financial institutions, including major public sector banks, housing finance companies, NBFCs and fintech partnerships, offer significant opportunity to reach millions of customers to promote health insurance in all segments of the population. We are privileged to have close to over 40,000 branches amongst our partners and this provides significant distribution opportunities. C is for corporate business. Star Health primarily caters to micro, small and medium enterprises. Our distribution reach allows us to tap into Tier II and Tier III cities, providing insurance solutions tailored to small and medium enterprises in ‘Bharat’. D is for digital directto-consumer (D2C) business. We are a leader in digital health insurance sales, holding an estimated 50% market share in D2C online insurance. This channel currently contributes 8% of revenues and is showing robust growth. Our home healthcare initiative in 100+ cities has effectively enhanced customer wellbeing. Significant investment in technology and automation allows us to have the best metrics in terms of low operating costs and high customer experience.
Star Health has 33% market share in retail health insurance. How do you plan to retain this share? Star Health Insurance has been the market leader in retail health for the last 18 years and we are focussed on strengthening our market share further. Our strategy focuses on three key areas: product innovation, affordability and accessibility. We offer over 35 health insurance plans catering to all segments of society.
Our product portfolio caters to a wide spectrum, including young individuals, senior citizens, people with pre-existing conditions like cancer and diabetes, autism, and more. In addition, our extensive distribution network and robust claims services set us apart. We have partnerships with over 14,000 hospitals and maintain a strong presence in Tier II and Tier III cities, which contribute nearly 40% of our business. Our Star Health customer app has approximately 9 million downloads. This enables our customers to stay connected and avail of all services at their convenience.
Star Health reported a 25.7% year-on-year decline in net profit to Rs 215 crore in Q3FY25. What is the reason for the dip and what is your outlook? After Covid, the Indian healthcare industry has witnessed high medical inflation, probably the highest globally. Rising cost of hospitalisation and cost of medicines, etc., are adversely affecting the entire population and are a concern. Of course, high inflation means elevated claims ratios for insurance companies, resulting in lower profits. Though our claims ratio in Q3 was elevated, our performance remains better than industry peers. However, we have had to align our product pricing strategy to match this market reality. Star Health Insurance has been on a steady growth path in the last five years, where we have grown our GWPs at a CAGR of 23%. We reported a robust performance for FY24, achieving 18% growth and reaching a revenue of Rs 15,250 crore while maintaining a 33% market share in the retail segment. We also delivered all-time high net profits of Rs 845 crore in FY24, which was an increase of 37% in profit after tax (PAT) over the previous year. The growth momentum has continued in FY25, with our company registering 16% GWP growth in 9MFY25. We remain highly optimistic on the long-term opportunity of the health insurance business. Our focus will remain on the retail health insurance segment. For the long term, Star Health aims to sustain an 18% CAGR rate over the next four years, targeting Rs 30,000 crore in revenue by FY28 while tripling profits to Rs 2,500 crore as per the International Financial Reporting Standards.
Has there been a recent premium hike, and do you foresee any further increases?
We have revised premiums across some of our products in this financial year. However, it is pertinent to note that price increases are our last resort. For example, one of our products-Senior Citizen’s Red-Carpet policy-had not witnessed a price increase for over 15 years.
What are the challenges that you aim to address? While the growth opportunity is obvious given the low penetration levels of insurance in India, two key concerns stand out for the health insurance sector: rising medical inflation and insurance fraud. Medical inflation is a challenge and we address this through better coordination with our 14,000 partner hospitals to ensure affordability and a seamless customer experience. We have strong partnerships with preferred hospitals to manage costs while ensuring quality care. We believe that for a robust healthcare ecosystem, India needs a healthcare regulator. Hopefully, the government will soon take some measures towards this end. Insurance fraud is another major issue, with an estimated 10% of health insurance claims being lost due to fraudulent actors. Unlike banking, where customer credit history, credit scores prevent repeat instances of fraud and abuse, the insurance industry lacks a centralised mechanism to track fraudulent policyholders or hospitals. Addressing this issue is crucial to maintaining fair premiums and claims settlements for genuine customers. At Star Health, we have invested heavily in technology and specialised teams to detect and prevent fraud and abuse.
What are your growth drivers?
Our growth strategy revolves around best-in class customer service, product innovation and market expansion. Health insurance in India is highly under penetrated and only about 50 million people have retail health insurance plans. We plan to introduce many innovative products to drive growth and to increase insurance penetration. For example, we have introduced outpatient treatment insurance coverage plans through a fully digital model on our Star Health customer app. We believe this can provide comprehensive coverage to our policyholders. Star Health is present in more than 17,000 out of the approximately 19,000 PIN codes that are there in India Aligned to the Irdai’s vision of ‘Insurance for All by 2047’, we stay committed to driving deeper penetration of health insurance, especially in semi-urban and rural areas. Since its inception in 2006, Star Health Insurance has processed over 12 million claims and an industry-leading amount of Rs 54,000 crore in claims settlement. The Covid period saw a substantial surge in claims volume and payments, demonstrating our robust claims management capabilities and commitment to customer support during challenging times. On the business front, health insurance businesses saw a massive spike during Covid as people became highly conscious of their health. Many new customers entered the market. As the pandemic effect wears off, health insurance has once again become a product that is heavily marketed, unlike during the pandemic when demand was organic. We plan to maintain growth momentum through technological innovation, new product offerings, and expanding distribution channels. On the claims side, there has been a shift in consumer behaviour post-Covid. We see more hospital admissions for common ailments such as infections and fevers, which people would previously manage through outpatient treatments or consultations with their family physicians. This increase in hospitalisation has impacted claim volumes. Our goal is to provide the highest quality treatment options to our customers in all parts of the country. To address this, we are investing in expanding our network of hospitals, telemedicine services, wellness programmes, and also home healthcare services.What product innovations are you focussing on? Star Health Insurance is built on the core values of customer-centricity, innovation, and transparency. Innovation is in our DNA and we have been pioneers in bringing many firsts to the health insurance industry. Our latest industry-first product, SuperStar, is an innovative health insurance plan offering unparalleled flexibility and customisation with 21 optional covers in addition to the exhaustive list of base covers that we have. Customers can tailor the policy to fit their specific needs, choosing from unique features like ‘Freezeyour- Age’, ‘Limitless Care’, ‘SuperStar Bonus’, ‘Wellness Programs’, and ‘Premium Waiver’. The SuperStar product has achieved remarkable success, driving fresh growth for the business. It has also become the top-selling product on our digital platform and also on leading web aggregators and digital partner platforms. OPD coverage represents a key priority in our products portfolio.Outpatient consultations, health check-ups, diagnostics, and even medicine costs are areas we are looking to integrate into our products. We already have products in this space that is performing well, but we are working on multiple variations to cater to different customer needs. Insurance in India typically does not cover dental and eye care. We see a significant opportunity in these areas and we are working with healthcare providers to develop specific plans for this. Would you consider entering the life insurance segment if the composite licence model is introduced? We have been closely monitoring this potential change. We have engaged a consulting firm to develop a strategic plan for us, evaluating both defensive and expansion strategies. Given our strong brand name, distribution network and loyal customer base, expanding into adjacent lines of insurance is certainly of interest and a natural extension. However, we would need to assess the regulatory requirements and capital implications before making a final decision. @teena_kaushal