Star Health hits new low; stock tanks nearly 25% in 2 months, here's why

The stock price of the general insurance company hit a new low of ₹339.85, falling 7% in three days on reports that the IRDAI has identified lapses in the company's claims settlement practices

Star Health and Allied Insurance Company share price hit a new low of ₹339.85, down 2 per cent on the BSE in Wednesday’s intraday trade. In the past three days, the stock price of the general insurance company has dipped 7 per cent on reports that the Insurance Regulatory and Development Authority of India (Irdai) has identified lapses in the company’s claims settlement practices and is likely to take action against the company.

 

However, Star Health Insurance, in a statement on the media reports, said that these assessments are a routine process to ensure compliance across the industry.

 

In the past two months, the stock has declined 25 per cent. It has tanked 47 per cent from its 52-week high level of ₹647.65 touched on September 9, 2024. Currently, it is quoting 62 per cent below its issue price of ₹900 per share. Star Health Insurance made its stock market debut on December 10, 2021.

 

“We would like to highlight that Irdai conducts regular audits and thematic inspections as part of its regulatory oversight, in line with the framework outlined in its master circulars. These assessments are a routine process to ensure compliance across the industry,” Star Health Insurance said in the statement,

 

The media statement appeared to be speculative and motivated in nature, and we have not received any communication on this subject from the regulator, the company said, adding that it continues to focus on enhancing claims processes and strengthening customer trust by adhering to the highest standards of service and compliance.

 

As per media reports, Irdai has identified serious lapses in Star Health Insurance’s claim settlement practices. While investigations are still ongoing, Irdai has also scrutinised 8-10 other insurers but no action has been reported yet. The review focused on claim repudiations, deductions and policyholder queries.

 

While clarity on any action by the regulator is awaited, this could impact investor sentiments and impact valuations in near term, ICICI Securities said in a note.

 

Star Health Insurance commenced operations in 2006 and is India’s first standalone health insurance provider. It offers health, personal, accident and travel (both domestic and overseas) insurance. The company has one of the largest health insurance networks in India with more than 14,340 hospitals.

 

At 10:18 AM, the stock recovered from its day's low and was trading nearly 1 per cent higher at ₹350.45 on the BSE. In comparison, the BSE Sensex was down 0.13 per cent at 77,915.