Star Health Savings up 35% from AI Enabled Fraud, Abuse Detection

Star Health and Allied Insurance has designed an AI platform for claims settlement, which has enabled the company to process claims faster besides reducing fraud, waste and abuse. The AI platform also works in conjunction with solutions from Insuretech partners and helped in solving the challenge of disparate formats of claim documents. 

In an interaction with FE CIO, Mukesh Sharma, Chief Digital Transformation Officer (CDTO), Star Health and Allied Insurance, informs the company will continue to invest in H2, 2025-26 in further expanding the AI capabilities.    

Edited Excerpts:

What have been the operational and customer experience impacts after deploying your new AI-powered claims and fraud detection platform at Star Health Insurance?

At Star Health Insurance we have an AI-powered claims platform, which has been instrumental in strengthening the way we manage claims and improving customer experience. At Star Health, fraud detection is sharper, and savings from fraud, waste, and abuse have gone up by more than 35 percent year-on-year. The platform helps our teams work faster and more accurately, with fewer manual steps.

Customers now receive quicker claim decisions, prompt updates, and consistent support through WhatsApp and the mobile app. The goal is to make every claim simple, transparent, and reliable. At Star Health, 96% policy issuance takes place within 2 hours, 95% cashless claims are settled within 3 hours.

What were the key development and implementation challenges for these digital initiatives? How did in-house teams overcome them?

One of the biggest challenges for the health insurance industry is the lack of standardisation in claim documents received from hospitals across the country. 

Star Health has settled the highest number of claims at 1.4 crore claims worth Rs 63,000 cr since inception, which is one of the highest in the industry. Given the high volume of claims coupled with each hospital using a different format, it made digitization and analysis complex. The first step was to build a system that could read and interpret non-standard formats through AI, detect anomalies, and convert them into a standard structure for business and medical rule application.

We addressed this by building strong in-house technology and product teams and by working closely with our insuretech partners. The focus was on improving accuracy and reducing manual effort. As part of this effort, we have started auto-adjudicating a large share of claims through digital transformation, which is helping us reduce turnaround times and deliver a more seamless experience for customers. 

What is the composition of the core IT, analytics, and business teams driving your digital business and D2C transformation?

Our digital transformation is being driven through close collaboration between technology, analytics, underwriting, claims, and digital business teams. Within IT and analytics, about 20 percent of the team is dedicated to D2C transformation projects that strengthen our digital sales and customer engagement.

We also have a dedicated digital marketing and sales function that focuses entirely onbuilding and scaling the digital channel. Together, these teams ensure that every digital initiative aligns with business growth and customer experience goals.

Why did you choose to build core digital platforms and AI/ML models in-house versus using third-party vendors?

We process four claims every minute and around 5000+ claims daily, thus it was imperative for us to build our core digital and AI systems in-house to ensure complete alignment with our business model, scale, and compliance requirements. International platforms often need extensive adaptation for local regulations, and in-house development allows us to innovate faster and customize solutions to our evolving needs.

Third-party solutions would have required 40 to 50 percent customization, which creates long-term maintenance and performance challenges. Over the past few years, we have built strong in-house capabilities in technology, product, and cloud engineering. With this foundation, it made better sense to build systems internally and source only select components when needed.

What further digital or AI/ML capabilities are planned for H2 2025-26?  

In the second half of this year, we are focusing on expanding our AI capabilities in the claims function to strengthen fraud, waste, and abuse detection. We are also advancing automation in underwriting to make customer onboarding faster and more accurate. Our next phase of investment will be in enhancing digital customer journeys to make interactions simpler, quicker, and more intuitive.