With the aim of reaching more people as part of the government’s insurance-for-all push, Star Health and Allied Insurance is launching an affordable health policy — Value Plus — in Tier-2, Tier-3 and Tier-4 cities across the country. The Chennai-based company will offer the new health insurance product at prices around 20% lower than its existing products.
Anand Roy, MD and CEO of Star Health and Allied Insurance, said, “When we conduct consumer surveys and discussions with distributors, affordability has emerged as the main reason for poor sales.”
The country’s largest standalone health insurer plans to offer the new policy at an annual premium of around ₹15,000-16,000.
The company is planning to appoint nearly one lakh insurance agents in the current financial year, of which around 80% will be in Tier-2, Tier-3 and Tier-4 cities, as it seeks to expand its base in South India and strengthen its presence in the eastern and northeastern regions.
Roy said, “The east and northeast regions have been our focus areas. The share of business from these regions has been less than 10%. We want to increase penetration, and affordability is a major roadblock. This cheaper insurance policy will help improve penetration there.”
The company also plans to roll out the Value Plus policy in central Indian states such as Uttar Pradesh, Bihar and Madhya Pradesh. It expects the newly launched product to contribute around 10% of revenue.
Commenting on the AHPI-hospital issue that surfaced nearly six months ago, Roy said the insurance regulator, insurers and hospitals are discussing the categorisation of healthcare expenses across hospitals.
“The healthcare services provided by hospitals in Tier-1 cities are different from those offered by smaller hospitals in towns and rural areas. Discussions are on around whether hospitals can be categorised based on fees charged, and whether insurance companies can accordingly fix premiums. These are still broad-level discussions and nothing concrete has emerged yet,” he said.
He added that hospitals and insurers, being commercial entities, would ultimately need to negotiate directly with each other. “It cannot be that the government dictates pricing arrangements. We have to deal with each hospital on a one-to-one basis,” Roy said.
According to Roy, the lack of empanelled hospitals in smaller towns and rural areas is one of the key reasons for low insurance penetration in the country.
“There are around 55,000 registered hospitals, while hospitals empanelled with insurers number fewer than 15,000. There is no strong network of empanelled hospitals in smaller cities, and therefore people do not see sufficient benefit in buying insurance,” he said.
On the deployment of artificial intelligence, Roy said nearly 25% of claims were processed using AI in FY26, and this is expected to rise to 50% in FY27. He added that 90% of new proposals are now coming through machine learning and AI-driven models. The company plans to invest ₹250 crore in technology and data privacy.