Star Health and Allied Insurance is launching a new affordable health insurance product targeted at tier-2 and tier-3 cities, offering premiums around 20% lower than its existing plans in those markets, as the insurer looks to deepen penetration beyond metros amid rising demand for retail health cover.
The product comes as the insurer seeks to expand its footprint in smaller towns, where affordability remains a key hurdle for insurance adoption.
“Almost 50% of our business currently comes from outside metros and state capitals. We want to continue focusing there and increase penetration,” said Anand Roy MD and CEO Star Health. “We still find affordability is a major issue in smaller cities and people would like to have more affordable plans.”
The insurer said the new product would retain features available in mainstream plans while being priced lower for non-metro markets. Metro cities have been excluded from the offering as healthcare inflation and claims costs continue to remain elevated there.
The company said non-metro markets are already structurally more profitable than large cities, with loss ratios in such regions running 4-5 percentage points lower than the company average. Star Health’s overall loss ratio stood at 69% last fiscal.
The move also comes amid increasing demand for health insurance following the government’s GST waiver on health insurance premiums. The company said the policy change has led to higher renewals, improved persistency and rising uptake of higher-ticket policies.
Separately, the insurer is also working on a preferred hospital network initiative, called Pratham, which is targeted at improving customer experience and reducing discharge delays through closer tie-ups with select hospitals across major cities.
The product comes as the insurer seeks to expand its footprint in smaller towns, where affordability remains a key hurdle for insurance adoption.
“Almost 50% of our business currently comes from outside metros and state capitals. We want to continue focusing there and increase penetration,” said Anand Roy MD and CEO Star Health. “We still find affordability is a major issue in smaller cities and people would like to have more affordable plans.”
The insurer said the new product would retain features available in mainstream plans while being priced lower for non-metro markets. Metro cities have been excluded from the offering as healthcare inflation and claims costs continue to remain elevated there.
The company said non-metro markets are already structurally more profitable than large cities, with loss ratios in such regions running 4-5 percentage points lower than the company average. Star Health’s overall loss ratio stood at 69% last fiscal.
The move also comes amid increasing demand for health insurance following the government’s GST waiver on health insurance premiums. The company said the policy change has led to higher renewals, improved persistency and rising uptake of higher-ticket policies.
Separately, the insurer is also working on a preferred hospital network initiative, called Pratham, which is targeted at improving customer experience and reducing discharge delays through closer tie-ups with select hospitals across major cities.
