State-owned Life Insurance Corporation of India (LIC) is mulling foray into the fast growing health insurance segment through the inorganic route of acquiring stake in standalone health insurers.
“We will definitely explore possibilities to have some stake in some standalone health insurance companies,” Chairperson Siddhartha Mohanty said, categorically ruling out merger with non life public sector insurers for the foray.
Driving the interest of the life insurance behemoth, which though is not entirely new to health insurance space given it deals in fixed benefit health covers, is the report of a Parliamentary Committee recommending issue of composite licence for an insurer to undertake life, general or health insurance under one entity.
Given such a possibility, once the relevant Act and regulations are amended, LIC has “done some work internally to occupy some space in health insurance,” Mr.Mohanty told an investor call, hinting this will be the only segment of interest in the general insurance business for LIC. “We are not expert in general insurance business... health will be a natural choice and for that we are exploring some inorganic type of growth,” he said, adding the proposal is at a very preliminary stage.
Through such a strategy, LIC would seek to increase its exposure to health insurance, beyond the fixed benefit products, into indemnity products too.
In its core life insurance business, the company intends to diversify product mix by enhancing share of non participating policies within the individual business; introduce new products to its portfolio; continue to maintain focus on agency channel while developing the Banca and alternate channel. Focus on digital transformation as well as on investment yield maximisation while balancing risk besides enhancing readiness of organisation to respond proactively to potential regulatory changes will be other focus areas for the LIC.
The Parliamentary Standing Committee on Finance, with Jayant Sinha as the Chairperson, had in its report said the Insurance Act, 1938, and the regulations of the Insurance Regulatory Development Authority of India do not allow composite licensing for an insurer to undertake life, general, or health insurance under one entity. However, the Committee is of the view that allowing composite licensing could provide impetus to the insurance sector owing to the various benefits, which include cutting down on costs and compliance hassles for insurers as they provide different insurance lines under one roof. For customers, composite licence would mean more choice and value such as a single policy covering life, health and savings. It can boost insurance reach and awareness in India, as customers can get all-in-one insurance from one provider, with lower premiums and easier claims.
The five standalone health insurers reported more than 26% increase in gross direct premium to ₹33,115.95 crore (₹26,243.85 crore) in FY24. Besides standalone insurers, many of the general insurers, including a few State-owned, are active players in the health insurance space. The gross direct premium of the general insurers and the standalone health insurers last fiscal increased 16.22% year on year to ₹2,68,705.05 crore (₹2,31,205.95 crore).
Published - May 28, 2024 10:13 pm IST