Star Health and Allied Insurance is launching an affordable health insurance product specifically targeting tier-2 and tier-3 cities, with premiums around 20% lower than its existing plans in these markets. According to reports from The Economic Times, the insurer is looking 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.
As reported by The Economic Times, almost 50% of Star Health's business currently comes from outside metros and state capitals. MD and CEO Anand Roy stated that the company wants to continue focusing on these markets and increase penetration. The insurer noted that 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.
According to The Economic Times, the move comes amid increasing demand for health insurance following the government's GST waiver on health insurance premiums. The company reported that this policy change has led to higher renewals, improved persistency and rising uptake of higher-ticket policies. Metro cities have been excluded from the new offering as healthcare inflation and claims costs continue to remain elevated there.
As reported by The Economic Times, Star Health 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 new product will retain features available in mainstream plans while being priced lower for non-metro markets, maintaining the insurer's focus on affordable healthcare solutions for smaller cities.
