Star Health & Allied Insurance Company – Leader In Retail Health

Conference Call Note – Star Health Insurance – Q1FY24

Industry Overview :

• In Q1FY24 Health Industry including Personal Accidental growth Rate is 21% Driven by 23% growth from group Health and 18% growth in Retail Health.

Company Overview :

• In Q1FY24 company grows at 20% .
• In Retail insurance at 19% Where industry growth rate is 18% During Q1.

Market Share Overview :

• Company has register 32% market share in Retail Health.
• 2nd largest Player in the Industry.
• Company will grow higher than the industry growth rate and increasing market share in Retail health insurance.
• Company has register 33% accretion Market share.

Company agencies :

• Agencies business continue to contribute 81% of the overall business.
• Company agencies strength has increased to 642588 Agents with ,
• The net Addition of 16728 Agents in Q1FY24.
• In Q1FY24 our corporate agent that is bank & other tie-ups continue to remain strong & the premium has been grown by 35% from this channel .

Key Highlights :

• Company has taken Price hike in the family health plan where the renewal pricing effective from 1 may 2023.
• In term of volume & value are in line in our expectation.
• The average sum assured of new policies has been increased by 10% on YoY basis now stand with 9.5lakh on average 5lakh & above sum assured now constitute 76% of retail health portfolio verses 69% in Q1FY23.
• Retail health premium growth likely to be strong at 15% + YoY.
• Expense Ratio to increase QoQ but decline YoY as share of retail business continue to grow .
• Claim ratio to increase a growth in absolute claim amount exceeds growth in NEP.
• Combined ratio to be under pressure due to higher loss and exp ratio.
• We are tied up with AU small finance bank , Bank of Maharashtra & Godrej Housing finance . It will expand our further reach & also strengthen sales .

Digital Initiative :

• Company continue to focus on there digital initiative & company is investing in Digital Area.
• The digital initiative grown at 22% in QFY24 compared to last year.
• Company has relaunched the star health application .
• The key feature of star health differentiate the journey of policy & non policy holder instant & schedule call with our free telemate services which we called as talk to star.
• The network hospital search has we made simple for customer to access the nearest network hospital to them.
• The organic traffic grow from website has grown 48% in Q1FY24 same period last year.
• The Dynamic QR Code introduce to all our policy renewal & also on the digital platform company will ensure customer can renew the policy in few clicks of button .
• It also lead to cost savings in terms of collection cost.

New Geography :

• In order to reach new geography company has identified almost 1000 sales manger agents which are located in semi urban & rural areas these are small individual service centres . In which 410 agents are in operational in this Quarter.

Lower claims and commissions drive improvement in combined ratio :

• The combined ratio improved 44 bps yoy to 97.8% in 1QFY24, driven by a moderation in the claims ratio and commissions. Operating expenses were up 27% yoy (higher than GWP growth of 20%), with a moderating effect on the combined ratio and profitability.
• Operating expense growth was elevated at 27%, driven by higher employee expenses (up 29% yoy). Management highlighted that employee expenses were high due to:
  (1) salary increment implemented in 1QFY24 and
  (2) new IT team of 30 hired for building the IT infrastructure