MUMBAI: The national insurer Life Insurance Corporation (LIC) will soon announce its foray into the health insurance sector, with ambitions to become a significant player, according to a top official.
The insurance industry, particularly life insurers, has been anticipating government amendments to the Insurance Act that would introduce a composite licensing regime, allowing life insurers to offer non-life products, including the highly lucrative health policies.
Currently, the domestic insurance industry consists of 70 players, with nearly half a dozen being standalone health insurers and the rest offering life and general insurance products. Many Western countries have adopted the composite licensing model, which was permitted in India until 2016, when the Insurance Regulatory and Development Authority of India (IRDAI) prohibited life insurers from providing general and health products.
LIC first revealed its health insurance plans this May, expressing interest in acquiring a majority stake in an existing health insurer to gain an early advantage rather than starting from scratch. “We want to be a large and serious player in the health insurance segment,” Chief Executive Siddhartha Mohanty told TNIE in a recent interaction. “We are sure we can make it really big because the market is very huge,” he added. Reiterating the company’s preference for acquiring a stake rather than launching a new entity, Mohanty said, “We will be buying a large stake in an existing health insurance company, and we are working hard on that. Hopefully, soon we will have an announcement to make on that front.”
In February, a parliamentary panel recommended establishing a composite insurance licensing regime to reduce costs and ease the compliance burden for insurers. Currently, life insurance companies are limited to offering only long-term health benefits. An amendment to the Insurance Act would be necessary to allow them to provide hospitalization and indemnity coverage.
India’s insurance market remains significantly under-penetrated. Life insurance penetration stands at less than 5 percent, while health insurance coverage reaches approximately 60 percent, or around 650 million people. Of these, 350 million are covered under government-sponsored programs, and around 200 million have group insurance coverage.
The government and IRDAI are eager to expand health insurance coverage, aiming for universal coverage by 2047. LIC’s entry into the health insurance market is expected to boost these efforts, given the corporation’s strong brand presence and its extensive sales force of over 1.3 million.
For the financial year ending in March 2024, LIC reported a net profit of ₹40,676 crore, up from ₹36,397 crore in the previous fiscal year. The total premium income for the year was ₹4,75,070 crore, compared to ₹4,74,005 crore in March 2023.
