In its FY23 annual report, Star Health (STARHEAL) outlined strong growth opportunities in India’s health insurance in India. The COVID-19 pandemic has heightened awareness of medical expenses, leading to increased walk-in business for health insurance. India’s high prevalence of conditions like diabetes, obesity, and cancer, coupled with a growing elderly population, will result in a continued uptick in hospitalisation cases.
To seize these opportunities, STARHEAL is intensifying its presence in rural India through a dedicated vertical catering to these regions. Additionally, the company is enhancing its bancassurance channel. While individual agents currently account for 82% of the distribution share and remain a cornerstone of STARHEAL’s growth, channels like bancassurance (5%) and digital (9%) are expected to grow more rapidly, potentially increasing their combined share in the coming years. This multi-channel strategy enhances customer accessibility, reinforcing the perception that ‘Star Health is just around the corner.’ In FY23, STARHEAL saw a 14% increase in agent count, reaching 626k. The company expanded its hospital network by adding 2,042 hospitals and securing pre-agreed agreements with 1,996 more. During this fiscal, STARHEAL processed 1.08 million claims through these network hospitals, with 73.3% of them being cashless. In terms of customer service, the company excelled, addressing 95% of cashless claims within 90 minutes and settling 90% of reimbursements within just seven days. Notably, all claims are handled in-house, and the company also conducts assurance visits to hospitals, providing valuable support to customers and offering free supplementary medical opinions.
STARHEAL’s commitment to technology was evident in FY23, with significant investments in digital platforms, data management, automation, and omni-channel accessibility. This tech-driven approach extended to various aspects of the business, including strategy, data analysis, talent management, risk assessment, market insights, system security and operational processes.
Valuation: We anticipate STARHEAL to achieve a 19% CAGR in gross premiums from FY23 to FY25. This growth will primarily be driven by a 20% CAGR in retail health premiums and a 10% CAGR in group business premiums. We expect claims ratios to stabilise at approximately 64%, resulting in a combined ratio of around 93%.