Star Health and Allied Insurance’s Big Plans for the Future
Star Health and Allied Insurance Co Ltd, a leading health insurance company based in Chennai, has ambitious plans for growth. They aim to double their gross written premium (GWP) to ₹30,000 crore by the financial year 2028, up from ₹15,251 crore in FY24. The company also aspires to become the largest health insurance provider in India, surpassing New India Insurance. Anand Roy, the Managing Director and CEO of Star Health, shared the company’s growth strategy and insights into the health insurance market.
Closing the Gap with New India Insurance
Currently, Star Health holds a strong position in the retail health insurance sector, with over 33% market share. However, their presence in the group health insurance sector, which makes up more than 50% of the market, is minimal at just 2%. To bridge this gap, Star Health is focusing on expanding its group business. Although they aim to become the number one health insurer, they are not setting a specific timeline for this goal. Instead, they plan to continuously expand their insurance coverage and innovate their products and services. In FY24, New India’s GWP was ₹18,321 crore, while Star Health’s was ₹15,039 crore.
Strengthening the Group Business
Star Health plans to strengthen its group business by targeting small and medium enterprises (SMEs) rather than large corporations. They are leveraging their extensive network of seven lakh agents, many of whom already serve SMEs. Additionally, they are collaborating with large banks like Bank of Baroda and Punjab National Bank, which have a vast network of branches and significant lending programs for SMEs. These partnerships will be the main drivers of growth in their group business.
Growing the SME Customer Base
To grow their SME customer base, Star Health has initiated a cluster-based approach. They are targeting specific clusters like Tirupur and Moradabad, where specialized industries are concentrated. They have identified 25 such clusters and are opening offices in these areas. While insurance adoption is already mature in manufacturing SMEs, they are now focusing on SMEs in the services sector. For example, they are reaching out to small business owners like restaurant owners to encourage them to provide health coverage for their employees. In addition to health insurance, Star Health is offering value-added services such as telemedicine and home healthcare services.
Regaining Share in the Retail Health Market
Last year, Star Health saw a slight dip in their retail health market share. This was due to reduced efforts in markets with high incidences of fraud and abuse post-COVID, and a slowdown in the portability business to avoid mis-selling. However, they expect to correct this dip and grow faster than the market in the coming years. They aim to increase their market share from 33% to 35% in the next four years, and grow their GWP from ₹15,000 crore to ₹30,000 crore by FY28.
Strategic Measures for Growth
Star Health’s growth strategy involves four main channels: agency, bancassurance, corporate, and digital. They are a significant player in the agency business and plan to add around 100,000 new agents every year to their existing network of 700,000 agents. On the bancassurance side, they are growing rapidly with partnerships with large public sector banks, non-banking financial companies (NBFCs), and housing finance companies (HFCs). For corporate growth, they are focusing on SMEs with a dedicated team. On the digital side, they hold more than 50% market share in the direct-to-customer space and have partnerships with players like Policy Bazaar. Their website receives substantial organic traffic, and they have a team of 2,000 tele-callers to follow up on inquiries. These four growth engines will help them achieve their target of ₹30,000 crore GWP by FY28.
Health Insurance Penetration Post-COVID
Post-COVID, there is a heightened awareness among people about the importance of health insurance. Customers now understand the need for individual health insurance plans, especially considering that company coverage might not always be available. Despite this increased awareness, the penetration levels of health insurance are still very low in India, indicating significant growth potential.
Dividend Payments
Star Health is still carrying forward losses from the COVID period. They expect to wipe out these accumulated losses by the end of this financial year. Once they have overcome these losses, they plan to start paying dividends, likely from the next financial year.
Conclusion
Star Health and Allied Insurance is on an ambitious path to becoming the largest health insurance provider in India. With a strategic focus on SMEs, leveraging their extensive agent network, and expanding their digital presence, they are well-positioned to achieve their growth targets. As they continue to innovate and expand their coverage, they aim to play a crucial role in increasing health insurance penetration in India.
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