Star Health's Market Share Halved! Is Its Bold Strategy Backfiring?

Star Health and Allied Insurance Company, formerly the dominant player in the standalone health insurance (SAHI) market, has experienced a sharp decline in its market share. Its share has nearly halved, falling from approximately 60 percent in FY21 to just 32 percent by the second quarter of FY26. This has happened even as the broader SAHI sector expanded by about 86 percent, growing from roughly Rs 63,700 crore in FY21 to Rs 1,18,688 crore in FY25.

Experts suggest the core reason for this erosion lies in Star Health's portfolio evolution. The contribution of its group and SME (Small and Medium-sized Enterprises) segment has shrunk from 10 percent in FY21 to about 5 percent in FY25, with its retail health insurance segment now comprising nearly 95 percent of its business. Managing Director Anand Roy stated during the Q2 FY26 earnings call that the company deliberately scaled back its group business due to rising loss ratios in corporate accounts, aiming to enhance underwriting quality and reduce exposure to unprofitable corporate clients.

This strategic pivot, while potentially improving short-term operating performance, may have significantly limited Star Health's exposure to a major part of market growth. In contrast, competitors like Niva Bupa Health Insurance and Care Health Insurance have maintained a more balanced portfolio, actively expanding their presence in the SME and mid-corporate group segments, which offer steady premium inflows and broader risk diversification.

Impact: This news directly impacts Star Health and Allied Insurance Company's financial performance and investor perception. Its strategic choices in portfolio management have led to a significant loss of market share, raising questions about its future growth trajectory compared to diversified competitors. The market may react negatively to this continued underperformance in market share, although the company's stated growth targets offer a counterpoint.

Impact Rating: 7/10

Difficult Terms: Standalone Health Insurance (SAHI): Health insurance policies offered by companies that exclusively deal in health insurance, not general or life insurance. Market Share: The percentage of total sales in an industry generated by a particular company. Retail Health Segment: Health insurance policies sold directly to individual consumers. Group Insurance: Health insurance policies provided to a group of people, typically employees of a company or members of an association. Loss Ratios: The ratio of claims paid out to premiums earned, indicating profitability of underwriting. Underwriting Quality: The process of assessing risks and deciding whether to insure them, aiming for profitable business. Gross Written Premiums (GWP): The total amount of premium written by an insurance company before deducting reinsurance costs or other expenses.