“The approach is to ensure that the business that we are underwriting continues to be profitable. We just do not want to grow for the sake of growth rate,” says Nilesh Kambli, Star Health & Allied Insurance.

Star Health’s agency growth has actually continued to be slow in Q3 as well with the channel growing by about 16% versus 17% in Q2 versus. And if you compare that in the preceding quarter as well that is 20% in Q1. Is this downtrend likely to continue in Q4 as well? Also, by when can we actually expect about 20% growth levels coming in for Star Health?
The decline in growth is by design and choice. We continue to focus on quality business with a risk-first approach. For the first nine months, we have grown by 18% on a company level. We continue to maintain our market share of 33%. So, we have made certain changes. We are focusing on quality business. We are likely to be in line or higher than the market growth rate for the short-term and medium-term as well.We just wanted to understand that is this a conscious call to like lower your volume growth to foster the higher profitability?
See, basically, yes. The approach is to ensure that the business that we are underwriting continues to be profitable. We just do not want to grow for the sake of growth rate. There are certain geographies, there are certain categories like the portability segment where the loss issue is very, very high. So, we do not want to do something just for the sake of growth.

Talk about your long-term loss ratios. They were actually higher than the company’s target of about 63 to 65%. Could you give us a guideline as to by when do you see it coming down?
In the month of November, December and Jan, the loss ratio is trending really well. Historically, quarter 4 is the best quarter when it comes to loss ratio. We are confident that, we should be able to bring down the loss ratio for Q4 and for the full year.

We are not giving any guidance when it comes to full year loss ratio, but yes, on an ongoing basis, again for the next year and years to come, we will ensure that we will continue to do well and keep on improving on the loss ratio.

Also, the industry continues to face challenges of the high medical inflation leading to a struggle on the profitability. Now, this is despite an increase in your tariffs. So, where is this headed? Any further price hikes on the cards and by how much and what would be the impact on the margins as well?
When it comes to Star Health, we have taken a price increase in our flagship product, which is Family Health Optima. That is going on really well. When it comes to other products, we continue to evaluate the portfolio on an ongoing basis. Whenever a portfolio hits a certain threshold loss ratio level, we go in for a price increase. Around 10% of the portfolio, we might go in for a price increase in Q4.

See, on an ongoing basis, while the medical inflation is higher, we continue to take steps to ensure that we bring in efficiencies when it comes to claim settlement; the fraud and abuse.

We have introduced certain home healthcare services where the customer can take medical facilities at the comfort of his home. This will ensure quality service to the customer as well as ensure that the cost is reduced for Star Health.
So, there are various steps which we are taking. The preferred hospital networks that we have created. We have negotiated rates which are very, very good. So, while the medical inflation is higher when it comes to Star Health, because of the volumes at which we operate, we are able to manage it very well. Going ahead, on an ongoing basis, we will continue to bring in efficiencies when it comes to claim settlement.

The management actually rolled out change in the incentive structure for agency channel in Q2. Is this exerting any pressure on your business by any chance? And also, any price revisions that are impending right now?
Not really. As a thought leader and as a market leader, we continue to experiment when it comes to various options. We have evaluated certain schemes to the agents. We have freed those schemes. The output has been really good. The agents are also ensuring that it is not only about growth, but it is about quality of the business and a long-term sustainable business model.

So, unless there are profits that business that you have written is not useful. So, everyone is understanding the importance of quality business and that is our objective. So, that is taken up really well by the market. And yes, we continue to make some tweaks to ensure that we grow and grow a quality business.

And also, the analysts expect the digital and the banker to contribute significantly to the new business going forward. What is the strategy here and how much could these segments contribute going forward?
Currently, bank is 5% of our business. Digital is around 7-8% of our business. These channels are growing really well. When it comes to fresh business, they are contributing 33% of our business. In the near term, long term, we expect these businesses to contribute around 50% of the fresh business. We have done a lot of investments. We have tied up with a lot of partners in the banking and NBFC space and these are giving us really good results. Around 50% of the fresh business will be contributed by these two segments in the near term.

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