Star Health Insurance clocks over 40% growth on back of strong distribution

Star Health and Allied Insurance, the largest standalone health insurance by market share has outpaced the industry growth with the onset of Covid-19 pandemic and a large agency led distribution channel.

Anand Roy, Managing Director at Star Health Insurance in an interaction with ETBFSI shared his perspectives on how they achieved a 40% YoY growth mark, how do the numbers on claims stack up and what are their future plans. Edited Excerpts:

Growth with Pandemic

In the current scenario, Star Health Insurance has emerged as the leader in the standalone health insurance segment. Over the last six months (April to October) they’ve captured more than 52% market share in terms of retail health and are at second position after New India Assurance. “That’s the kind of market leadership and domination we’re going through and growing at 45% YOY as on date as GI industry growth has been pretty much flat, in the health segment it’s around 14%. But largely coming from two things, we’ve extensive agency distribution across the country and more than 1000 branch offices,” said Anand Roy, Managing Director at Star Health Insurance.

The demand for health insurance during the lockdown and pandemic was evident and that led to a rapid growth. Roy adds, “That demand was very crucial and we were able to leverage the large distribution in place and meet the demand requirement where agents played a major role by adopting digital modes to converse with customers and advise on policies digitally across agency network.”

On the number of policies sold, Star Health saw a growth of more than 50%. In April-October 2019 a total of 25 lakh policies were sold as compared to 38 lakh policies sold between April-October 2020. Roy added, “On an overall basis, last year (FY20) we sold 55 lakh policies and this year (FY21) with a growth of 50% we’re hoping to sell 75 to 80 lakh policies this year and that’s the objective.”

Health has outpaced other segments and he sees a stagnant growth for the GI industry for another one year, but the health segment at industry level will continue to grow over 20% in coming years.

Growth in Covid-19 specific policies

Insurance regulator, IRDAI had issued guidelines to all insurers to roll out Covid-19 specific policies like Corona Rakshak and Corona Kavach.

Both the policies saw a rapid upsurge during the peak of the pandemic in the month of July & August. Roy said, “We were the first to aggressively market both the products and we are the largest sellers of this product, combining more than 5 lakh policies, though there’s no published data but our market estimates show that.”

The Covid-19 specific policies constitute to around 5% of total policies Star Health Insurance sold. He noted, “We sold mostly the regular policy where people would get a comprehensive cover apart from corona they’d be covered for everything else also. Even the Aarogya Sanjeevani policy worked out well for us and all of this combined helped us to get a better market share.”

Number of Claims

Initially most of the insurers didn’t see much claims as in the beginning patients diagnosed with Covid-19 were going to Covid-19 hospitals but as private sector hospitals opened up insurers saw a surge in the claims but have tapered off in the last month as cases have been declining.

Roy added, “As the number of cases saw a decline and we saw a similar trend in the other claims. Covid-19 specific claims are around 40,000 and of which 80% have been settled and overall between April – September we’ve settled around 2.5 lakh claims. The numbers are almost the same as compared to last year.”

He believes that the outgo is substantially higher as the Covid-19 claims are at least 3-4 times larger in ticket size as compared to regular claims. As the outgo paid on these total 2.5 lakh claims is almost 40% higher than what they paid last year.

Strategy Ahead

Roy explained that whenever an epidemic has broken out in any part of the world in the past the health insurance business has grown for the next 3-4 years very rapidly. He added, “I believe that will be a trend in India and I am seeing the early signs. This particular awareness created by the pandemic will be a great fillip to the health insurance industry towards the penetration.”

At Star Health Insurance their strategy is to continue to grow in the affordable segment and have a growth in other segments as well for different groups. He explained: “Senior Citizen plans and in the current scenario it’s working really well for us. Our strategy is also to move to the semi-urban and rural markets and that segment is left untouched. Nobody caters to those markets and they’ve to depend on government schemes or manage on their own.” “We are focusing on right pricing for the semi-urban and rural market and expanding our reach as well and created a team for it.”

Rural is going to be a digital first model for them unlike what they’re doing right now though there’s been significant digital adoption on the urban side as well. He stated, “But in rural areas we want to make a digital first model with virtual offices in a tablet device and our agents can work from remote locations and don’t have to visit branch offices and can carry on to do business in their region.”

The insurer has evolved its products in some specific segments like for people who are already diagnosed with cancer who can get insurance, similarly for people with cardiac ailments, no other insurers provide the products/plans to people with these existing illnesses. “Senior Citizen that is a neglected segment and even a 75 year old citizen can buy a health insurance plan without any increase in premium. We want outliers to come into the fold of health insurance, not only the healthy segment which everybody is running after,” he mentioned.

Source: The Economic Times