Jagannathan reports on business plans of new health
insurer, Star Health Allied Insurance.
Star Health and Allied Insurance Company Limited,
the only stand alone health insurer in India, the company
closed 2006-07 with a premium income of Rs30 crore selling
over 75,000 policies, during eight months of operations
in its first year.
Apart from selling individual and group health insurance,
Star Health also vends allied personal insurance policies
like personal accident and overseas travel insurances.
Last fiscal the company earned Rs13 crore from personal
accident insurance polices and Rs1 crore from selling
overseas travel insurance. The rest came from health
affable chairman and managing director V Jagannathan
says, "It is challenging to be a pure-play health
insurer. However it is worth it as the future potential
corporates as his clients, who are bulk buyers of health
and personal accident insurance policies has been a
major challenge for Star Health that faces several entry
these years, non-life insurers have been dangling the
loss making health insurance business for getting the
more profitable corporate businesses like fire, transit
and engineering insurances. And corporates feel that
they would lose their leverage by opting in favour of
an exclusive insurer for health insurance.
who are comfortable dealing with non-life insurers offering
a wider product basket that includes health, personal
and overseas travel policies service the corporate business.
Finally the corporate agents are averse to dealing with
a standalone health insurer as it would bar them from
representing other non-life insurers.
days of dangling the carrot are getting numbered now.
The reduction in fire insurance rates, post the dismantling
of administered pricing regime, has burnt the fat used
for cross subsidisation of business lines. Today other
insurers are also choosy like us," says Jagannathan.
the jinx with the brokers is expected to continue for
some more time despite the company receiving requests
for quotes. "Two years from now we will be the
most sought after health insurer in the country."
he asserts. Today Star Health has around 45 corporates
on its client''s roster.
the present Star Health''s focus is on the individual
segment where awareness about health insurance has increased
substantially. The company is strengthening its distribution
network with an additional 25 offices across the country
and also add to its agency force.
company has benefited from Insurance Regulatory and
Development Authority''s (IRDA) permission to enroll
agents of other non-life insurers; it has on its register
around 5,500 agents. "We would increase the numbers
to 10,000 by June this year," adds Jagannathan.
to Jagannathan the company has requested IRDA to permit
a similar facility for appointing corporate agents who
are no different to individual agents except for their
status as incorporated businesses. In addition the company
will expand its own marketing force by hiring more marketing
executives. In addition the company will also start
vending its personal accident insurance policies online.
about the company''s product portfolio assistant Anand
Roy, vice president, says, "We have policies for
all segments starting from micro health insurance to
floater covers." The company is awaiting the regulator''s
clearance for launching a product to cover diabetes.
insurer plans to advertise aggressively to help it reach
its target of Rs66 crore premium income this fiscal
and has hired ad agency Brand Portrait to develop its
communications. So far it has been advertising on FM
radio stations and a few TV channels. According to Roy,
Star Health ads will be seen across all advertising
medium from print and TV to outdoor and online, the
budget for which is around Rs5 crore.
to Jagannathan, the insurer''s claims outgo is very negligible,
because of its strict and discriminating underwriting.
The prospects are required to undergo medical tests
at the company''s cost. Based on the medical test reports
Star Health decides whether to accept the proposal as
it is or impose additional conditions.
the prospect does not agree to the additional conditions
or restrictions then the premium collected will be refunded
after deducting the charges for the medical tests,"
says chief general manager Vishwajeet Mohnot.
order to cut down costs, the company has negotiated
special rates with hospitals and has a team of qualified
doctors who not only process claims but also help to
spot fraudulent claims from clients, hospitals and medical
establishments, particularly billings in excess of normal
requirements of consumable medical products in operation
addition the company does not use the services of third
party administrators (TPA) who are increasingly holding
policyholders to ransom. "The claims settlement
is hassle- free and there is no delay," asserts
claim recoveries from reinsurers he says, "We reinsure
only high-value personal accident policies with General
Insurance Corporation of India. Our reinsurance outgo
is very minimal."
positive claims experience is probably partly due to
"divine" intervention all staff start
their workday with a prayer for the well being of their
policyholders! Jagannathan who had introduced a company
anthem United India Insurance Company Limited, at his
previous employer, is planning something similar at
the company has mooted the idea of differential / regional
premium rates, for which it hopes to have IRDA''s sanction.
Today, except for motor and earthquake covers, premium
for all other insurance is uniform across the country.
In a way there is cross subsidisation between regions,
with the rural and small town policyholders subsidising
policyholders in metros like Mumbai and New Delhi where
medical bills are very high.
the monopoly of public sector insurers in offering risk
covers to the poor under government sponsored schemes,
Star Health recently bagged the mandate from the Andhra
Pradesh government to cover families living below the
poverty line in the districts of Mahabubnagar, Anantapur
and Srikulam districts.
company designed its Aarogya Sri policy for this purpose
covering six critical ailments like cancer, heart, kidney
failure and others. The state chief minister Y S Rajasekhara
Reddy has announced that the scheme would be extended
to the whole of Andhra Pradesh in two years time, which
in turn augurs well for Star Health.
have deployed around 350 staff in Andhra Pradesh to
service this business. We have tied up with several
hospitals for this scheme," says Jagannathan.
sufficiently with Rs105 crore Jagannathan says the company
will get the needed capital from the owners as and when
required. Last fiscal Star Health earned Rs8 crore from
its investment activity on an investment portfolio of