Private sector health insurer Star Health is bringing in ₹400 crore into the company in order to be able to meet the statutory solvency margins.

Early this financial year, Venkatasamy Jagannathan, Chairman and Managing Director of Star Health and Allied Insurance Company, set a ‘tough target’ of ₹2,000 crore of premium.

In the previous year, the company had collected ₹1,470 crore in premiums – so the target would mean a 50 per cent leap in business.

But Jagannathan thought a milestone number was an appropriate goal for the company that had just begun its 10th year of operations.

As it turned out, the target was not tough at all.

The company has achieved ₹715 crore of business thus far into this year – a comfortable cruise towards the target.

In insurance, the more business you do, the more money you have to set aside, under the mandatory solvency ratios, so that if there is a sudden barrage of claims, the company is not left blinking.

Hence, the ₹400-crore infusion, which includes ₹100 crore of equity brought in by the promoters.

But the highlight of Star Health’s business is, according to Jagannathan, more the quality than the top-line.

In the first quarter of the current year, the company made its first ever underwriting profit, or insurance profits, as opposed to the profits an insurance company would make through its investments.

The big mantra Health insurance in India has consistently been a victim of fraud and the segment has typically been haemorrhaging cash.

But Star Health has a simple mantra to avoid loss — keep away from corporate business — where a company insures its employees and pays the premium.

Such bulk customers have the power to hammer prices down — hence the business is low-margin.

Only ₹7 out of every ₹100 of premium collected by Star Health come from ‘corporate’ business.

Jagannathan, a former Chairman and Managing Director of United India Insurance, says Star Health has 250-odd doctors who audit hospital bills before settling them.

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