Star Health has launched a low-cost health insurance product targeted at individuals and families in tier 2,3 and 4 cities. Managing Director and Chief Executive Anand Roy tells Narayanan V that customers from these markets will account for 60% of the business over the next two years. He also speaks about the FY27 growth outlook and how the country’s largest standalone health insurer is leveraging AI in claims processing and underwriting. Excerpts:
What prompted the launch of an affordable product?
Star Health is completing 20 years this May, and we are launching an affordable product, called Value Plus, to mark the occasion. After the GST rate cut, health insurance pricing has become more affordable. We felt that mainstream products are still seen as expensive in tier-2, tier-3 and tier-4 cities. Affordability and premium cost remain the biggest deciding factors in these segments. With an 18% GST rate cut and this product being around 20% cheaper, customers can now get coverage at almost 40% lower cost. Nearly 50% of our business already comes from non-metro markets outside state capitals, and we believe this share can increase to at least 60% over the next two years.
Healthcare inflation remains elevated. How do you balance affordability with profitability?
A number of initiatives are being taken at the regulatory level. Irdai is engaging with both healthcare providers and health insurers, and has formed four-five working groups involving both the sides. We hope these efforts will help bridge the trust deficit between insurers and hospitals. Healthcare inflation continues to rise every year, so there is no straightforward answer to the issue. What we are trying to build is a value network of over 11,000 trusted hospitals that can work with us and grow profitably.
What is Star Health’s premium target for FY27?
We had earlier set a target of reaching ₹28,000 crore in gross written premium (GWP) by FY28. The launch of Value Plus is a part of that strategy – if we want to reach ₹30,000 crore in premium, we have to improve penetration in these markets. Last year, we reported around ₹20,400 crore of GWP. We aim to reach around ₹24,000 crore this year. We were also able to bring down our combined ratio last year, largely due to investments in technology and automation of systems and processes. Our operating expenses are also declining. In fact, we are the only company in the health insurance space operating within the expenses of management limits prescribed by the regulator.
How is technology reshaping your business operations?
We are investing significantly in technology, especially in fraud management and hospital relations. Fraud levels in the health insurance space are unfortunately very high. As the largest standalone health insurer, we sit on a large amount of data, and we have invested in artificial intelligence (AI) and machine learning tools.
The next phase of growth will come from GenAI models built on our own data and linked with external data sets. We are also using AI and machine learning models in underwriting. New proposals are now going through AI-driven platforms to detect fraud patterns and assess pricing. Nearly 25% of our claims are processed through the AI engine we have developed in-house. We expect that to increase to at least 50% over the next one to two years. I am of the view that, maybe, in another three years, 100% of claims will be AI or machine driven. If not 100%, at least 95% will be like that. Only exceptional cases will be managed by human beings. That is my belief.