Say you are planning to purchase a health insurance plan. What’s your first decision - the plan or the insurer?

Well, the first thing you should prioritise is the choice of health insurance provider because irrespective of how good a plan you avail, if the approached insurer is not up to the mark, you will face prominent hurdles in claim settlement when you need your insurer the most.

To avoid such unfavourable situations wherein your insurer tries to offer a reduced claim, rejects your valid claim, or pulls in hidden terms and conditions out of the blue, you must make the best possible decision while choosing a health insurance provider.

Catering to such purposes, we have taken upon two insurers: HDFC Ergo and Star Health. Both are private life insurance companies with an extensive track record. And yet, there is a vast difference in their operational efficiencies, comprehensiveness of their product portfolios, pricing of the plans offered, and client satisfaction.

Which of these two takes the win? Here’s what we found out!

Health Insurance Comparison
ASPECTS HDFC Ergo Health Insurance Star Health Insurance
Claim Settlement Ratio 97.50 82.01
Incurred Claim Ratio 85.27 82.17
Volume of Complaints 6.80 29.04
Network Hospitals 9300+ 14,000
Affordability of plans Slightly expensive Expensive
Major Plans Optima Super Secure / Secure myHealth Suraksha Star Comprehensive
Star Health Young Star

HDFC Ergo Health Insurance or Star Health Insurance: Which is Better?

HDFC Ergo is one of the country's most popular private insurance providers. This general insurer is a joint venture between India’s HDFC and Germany’s ERGO International AG and is known for its comprehensive range of health insurance plans and exceptional operational efficiency. While the plans from the HDFC stable can be slightly expensive compared to others in its class, the features make it a worthy purchase.

Since its 2006 inception, Star Health Insurance, a standalone company, gained a vast clientele initially. While once holding a monopoly due to an extensive agent network, it faced client backlash with the emergence of new competitors. Rising complaints over operational issues, sudden delisting of network hospitals, and plan withdrawals contributed to this decline. Despite offering policies to clients with less preferred medical histories, such as cancer patients, clients will continue approaching other insurers unless the insurer's operational performance improves.

The above summary of the insurers’ current credibility scores is per our latest first-hand experience with them and what we have heard from our clients. To ensure the facts, let’s look at the official numbers (of metrics used to determine its credibility) reflecting the insurer’s operational and business status.

(Please Note: We have taken the average number for each metric over the last 3 years, 2020- 2023. This gives a more consistent insight into the performance of an insurer. Additionally, please remember that you might see an inconsistency in numbers for 2020-21, owing to the pandemic hit and the higher volume of claims raised subsequently.)


1. Claim Settlement Ratio (CSR)

One of the primary metrics (but not the only one) that helps determine the credibility of an insurer is the Claim Settlement Ratio. This is calculated by -

(Total number of claims settled in a year / Total number of claims received in the year) * 100

However, when deciding the total number of claims received for a year, the IRDAI (Insurance Regulatory and Development Authority of India) factors the claims settled last year and deducts the outstanding claims from this year.

An ideal claim should be between 90 and 100. While a CSR of below 80 indicates that the insurer might fail to settle your valid claims, a CSR above 100 is alarming, too. A 100+ CSR means that the insurer failed to settle multiple claims from the previous year, which should be a red flag for policyholders. So, it’s best to avoid insurers having a CSR that is less than 80 or more than 100.

In terms of CSR, here’s how HDFC Ergo and Star Health have performed over the last 3 years (2020 to 2023) -

CSR Across the Years
CSR across the years HDFC Ergo Health Insurance Star Health Insurance Industry Average/year
2020 - 2021 97 83.64 91.484
2021 - 2022 100 82.33 89.967
2022 - 2023 95.49 80.07 91.460
Average of 3 years 97.50 82.01 90.970

CONCLUSION: HDFC Ergo emerges as the clear winner in this category. Moreover, please note the consistency the insurer has shown over the 3 years, wherein they have managed to keep their CSR numbers above 95 each year.

On the other hand, Star, despite having an equally large clientele, has yet to cross the 90 threshold across any of the years.

2. Incurred Claim Ratio (ICR)

The Incurred Claim Ratio of an insurer reveals its financial stability and sustainability for the future. Policyholders paying premiums towards their health insurance plan need to know if their insurer will continue to stay in business and extend financial protection for the long run.

An ICR is calculated by -

(Total amount of claim settled in a year/ Total amount of premiums collected in the year) * 100

The ideal ICR for an insurer ranges from 50 to 70 (can go up to 90) as it indicates that the insurer focuses equally on its business stability and client requirements (by settling claims). It also shows that the insurer is financially stable with higher chances of sustainability for the foreseeable future.

On the other hand, if the ICR drops below 50, you are looking at an insurer who is too focused on getting profits and, hence, is rejecting your claims. And if the insurer has an ICR of above 100, it suggests that the company is paying out more claims than the premiums it earns. So, you will soon look at an insurer facing a financial deficit, spiked premiums (to regain financial stability), or rejected valid claims.

Here’s how the ICRs look for Star Health and HDFC Ergo for the year 2020-2023:

ICR Across the Years
ICR across the years HDFC Ergo Health Insurance Star Health Insurance Industry Average/year
2020 - 2021 79.3 94.44 78.274
2021 - 2022 97.47 87.06 91.788
2022 - 2023 79.04 65 78.818
Average of 3 years 85.27 82.17 82.96

CONCLUSION: Both Star Health and HDFC Ergo come neck to neck in the numbers for ICR. However, HDFC Ergo beats Star Health with slightly higher numbers.

Here is something you should consider: Star Health has a broader client pool (thanks to the selling campaigns of their hired agents). Hence, with plans for Cancer patients (that involve frequent and larger payouts over lengthy treatments), the ICR numbers should have been much higher than those of HDFC. This means the company is either paying out claims partially or rejecting some valid claims.

3. Volume of Complaints

When purchasing a health insurance plan, one of the priorities that you should have is the insurer’s operation efficiency. This might include streamlining claim settlement, handling client queries, helping with client requests to introduce plan changes, and more.

If an insurer has a higher complaint volume, you can infer that the company has failed to meet clients' expectations. This is a crucial metric to determine whether the health insurance provider is worth approaching.

Here is a look at the complaint volume for HDFC Ergo and Star Health.

(Spoiler alert: This is going to be the deciding metric in choosing between HDFC Ergo and Star Health insurance)

Complaint Volume Across the Years
Complaint Volume across the years HDFC Ergo Health Insurance Star Health Insurance Industry Average/year
2020 - 2021 6.21 4.62 13.212
2021 - 2022 7.95 33.65 35.969
2022 - 2023 6.23 48.85 19.578
Average of 3 years 6.80 29.04 24.029

CONCLUSION: Needless to say, HDFC steals the win here. The company’s complaint volume is one of the lowest in the industry. Despite the havoc created by the pandemic, the insurer managed to maintain its low complaint record for the years mentioned above.

On the other hand, Star Health has an above-average (industry) complaint volume, reflecting its operational performance issues. While the company’s standalone health insurer status might have contributed to this spiked number, other standalone insurers have managed to keep a lower complaint rate.

4. Network Hospitals

One of your most common expectations as a policyholder is that a health insurance plan will safeguard your savings by offering cashless treatment options. However, such cashless perks are only available in partner hospitals.

Subsequently, the “number of network hospitals” has been included as a determining metric for health insurance providers. The more network hospitals there are, the better it is for a policyholder since there are higher chances of more hospitals around their residence. So, whether it’s a planned treatment or an emergency, there are higher chances that you, as a policyholder, can conveniently approach a partner hospital and avail of cashless treatment perks.

Here is a look at the number of network hospitals between HDFC Ergo and Star Health insurance companies -

Network Hospitals Comparison
Number of network hospitals HDFC Ergo Health Insurance Star Health Insurance
9300+ 14,000

CONCLUSION: Star Health takes the win here with a higher number of partner hospitals. HDFC Ergo (founded in 2002) should indeed have had higher numbers closer to Star Health’s (founded in 2006). However, please consider that since agents are involved who sell Star Health plans physically they have a wider network of clients. This gets them on better terms with hospital authorities, improving their chances of tie-ups with medical facilities.

5. Major Plans

HDFC Ergo and Start Health have an extensive range of health insurance plans available to their clients. However, depending on the prices, features, add-ons, terms, and conditions (waiting period, exclusions, room rent coverage, copayment, disease-wise sub-limit, restoration, etc.), only some of the plans can be considered economical, ideal, comprehensive, and worth its premiums.

Here is a look at some of the best health insurance policies from these providers -

Health Insurance Plan Comparison
Health Insurance Providers Best Health Insurance Plans Pros Cons
HDFC Ergo Health Insurance Optima Super Secure Secure Benefit that ensures 3 times the cover amount right from the time the policy commences.
The healthy loyalty benefits (50% to 100%) that boost your cover amount during each renewal.
The plan is comprehensive.
To opt for the Secure benefit, a 3-pay is a must.
Slightly more expensive as compared to regular plans.
myHealth Suraksha Gold A comprehensive plan with not many restrictions/clauses.
Extensive coverage.
3-year waiting period on pre-existing medical conditions.
Star Health Insurance Star Comprehensive No copayments until you turn 61 or above.
Maternity coverage.
No room rent restriction up to a single private room.
3 years waiting period for pre-existing conditions (you can reduce this with a PED Buy Back rider that adds to the already high premium).
Slightly expensive.
OPD benefits come with a ₹300 cap on each consultation (maximum annual cap is ₹1200 to ₹5000 per year, depending on the cover amount).
Star Health Young Star Economical.
1-year waiting period on pre-existing conditions.
No copayment.
No disease-wise sub-limit.
Free annual health check-up.
No domiciliary coverage.
No coverage for AYUSH treatments.

HDFC Ergo Health Insurance vs Star Health Insurance: What Should You Choose?

Across all the metrics of CSR, ICR, and complaint volume, HDFC Ergo is the better of the two insurers. However, Star Health's complaint volume numbers are most alarming and revealing. When a health insurance provider consistently has such high complaint rates, availing of its policies is not without risks. So, irrespective of how comprehensive Star’s health insurance plans might appear, you can always find equally (if not better) policies from HDFC Ergo. The latter can also ensure smooth claim settlements and affordable plans.