LIC is looking at the health insurance market and considering acquisitions

According to The Times of India, which cites LIC president Siddhartha Mohanty, the state-owned Life Insurance Corporation (LIC) is considering entering the health insurance market and is currently assessing possible acquisition options. The action takes place during the plan to admit composite insurers to the market.

“We have completed some internal preparatory work and the new government is expected to approve composite licenses. LIC Chairman Siddhartha Mohanty stated, “We are interested in health insurance and are also evaluating the potential for inorganic expansion, despite our overall lack of insurance experience.

To reduce costs and regulatory constraints for insurers, in February 2024, a legislative committee recommended implementing a composite insurance license. Currently, life insurers are limited to providing benefits related to extended health insurance. In order for life insurance companies to be able to provide hospitalization and compensation insurance, it would be necessary to change the Insurance Act.

LIC’s switch to health insurance should increase coverage.

By the end of 2022-23, less than 2.3 crore health insurance plans will be issued in India, covering around 55 crore people, indicating that the country’s insurance sector is still extremely underdeveloped. Nearly 30 crore people have been covered by government-sponsored schemes and nearly 20 crore by group insurance.

Government and regulatory bodies are in favor of issuing more health insurance policies and the emergence of LICs is expected to spur expansion in this industry. IRDAI data shows that in FY23, life insurers issued less than 2.9 lakh new policies, covering over 3 lakh lives.

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