Falling Market Share of Star Health Insurance Amid Industry Growth

The Indian health insurance industry is experiencing a growth spurt. However, amidst this positive trend, a concerning development casts a shadow on Star Health Insurance, once the undisputed leader.

Market Share Expansion

The past year has seen a significant rise in the market share of standalone health insurance companies. This signifies a growing awareness among Indians about the importance of health insurance protection. The industry as a whole has witnessed a 73 basis point increase, indicating a rising demand for health insurance products.

Star Health’s Slipping Grip

In comparison to its competitors in the standalone health insurance industry, Star Health Insurance, the biggest standalone health insurance provider, has seen a considerable drop in market share. By the end of March 2022, Star Health Insurance had about 55% of the market for stand-alone health insurance; but, by March 2023, this percentage had fallen to 49%, and by February 2024, it had further decreased to 45%.

Over the previous two years (March 2022-February 2024), this decline reflects an approximately 1,000 basis point (BPS) or 10% reduction in market share. The market share of independent health insurance providers has increased overall in comparison to general insurance carriers, coinciding with Star Health Insurance’s decline in market share.

While the industry rejoices in its expansion, Star Health Insurance stands out for a different reason – a decline in market share. Over the past year, the company has lost a significant 400 basis points, translating to a 4% drop. This stands in stark contrast to the industry’s overall growth, raising concerns about Star Health’s future performance.

The Standalone Health Insurance Industry (SAHI) grew a market share of 148 bps from the general insurance industry over the same two-year period,

A number of organisations have seen increases in market share in the standalone health insurance sector. Aditya Birla Health Insurance increased by 270 bps or 2.7%, Niva Bupa Health Insurance by 355 bps or 3.55%, Care Health Insurance by 260 bps, or 2.6%, and Niva Bupa Health Insurance by 50 BPS or 0.5%.

Possible Reasons for Star Health’s Struggle

Several factors could be contributing to Star Health’s woes:

• Increased Competition: The health insurance market is becoming increasingly competitive, with new players offering attractive policies and aggressive pricing strategies. Star Health might be struggling to keep pace with this evolving landscape.
• Claim Settlement Issues: Negative customer experiences regarding claim settlements can severely impact an insurance company’s reputation. If Star Health has faced such issues, it could be deterring potential customers.

Conclusion

The Indian health insurance industry is thriving, but Star Health Insurance, a former leader, finds itself at a crossroads. By analysing the reasons behind its market share decline and implementing effective strategies, Star Health has the potential to bounce back and reclaim its position in the ever-evolving health insurance landscape.

About Star Health & Allied Insurance Ltd

Star Health & Allied Insurance Ltd (Star) is the first standalone health insurance provider in India and the largest private health insurer in the country. On March 20, 2024, the share price of the company opened at ₹545.05 and touched the day high of ₹553.25 at 11:45 AM.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.