LIC predicts lucrative health insurance industry to grow from $36.85 billion in 2022 to $82.5 billion by 2030, possible acquisitions

This information comes from a report quoting LIC chairman Siddhartha Mohanty; this move is considered as the sector envisages a regulatory change enabling composite insurance companies.

In February 2024, a parliamentary committee recommended the introduction of compound insurance licensing to reduce costs and regulatory challenges for insurers.

Currently, life insurance companies can only offer extended health benefits. To enable these companies to provide hospitalization and compensation insurance, an amendment to the Insurance Act would be necessary.

LIC’s entry into health insurance is expected to significantly increase coverage.

“We anticipate that the new government may allow composite licenses and have prepared internally for this possibility. While we lack expertise in general insurance, we are eager to enter the health insurance market and are exploring inorganic growth opportunities,” said LIC CEO Siddhartha Mohanty.

Reaching the Indian health insurance market

The Indian insurance market remains largely underpenetrated, with less than 2.3 crore health insurance policies issued by the end of 2022-23covering approximately 55 crore people.

Government-sponsored initiatives have covered nearly 30 crore people, while group insurance has covered nearly 20 crore; however, both the government and regulators are advocating for increased issuance of health insurance policies.

The entry of LIC is expected to catalyze growth in this sector. According to Irdai data, life insurers issued less than 2.9 lakh new policies in FY23, covering nearly 3 lakh lives.

LIC results

Meanwhile, insurance giant LIC is considering entering the health insurance segment, recorded a marginal 2 percent increase in net profitreaching Rs 13,763 crore for the fourth quarter ended March 2024, mainly due to provisions made for salary hike.

A year earlier in the corresponding quarter, the insurer reported a net profit of Rs 13,428 crore.

According to regulatory filings, LIC’s total income rose to Rs 2,50,923 crore in the reporting quarter, up from Rs 2,00,185 crore in the same period of the previous fiscal.

At the same time, premium income for the first year improved, rising to Rs 13,810 crore in the January-March quarter from Rs 12,811 crore in the same period of the previous fiscal.

Renewal premium income during the reporting period increased to Rs 77,368 crore as against Rs 76,009 crore a year ago.

For the full financial year ended March 2024, LIC’s profit was Rs 40,676 crore, up from Rs 36,397 crore in the previous fiscal.

Total premium income for the year ended March 2024 was Rs 4,75,070 crore, slightly higher than Rs 4,74,005 crore recorded in the year ended March 2023.

In FY24, 2,03,92,973 policies were sold in the individual segment as against 2,04,28,937 policies in the previous financial year.

The board has recommended a final dividend of Rs 6 per share for 2023-24, subject to shareholder approval, the LIC chairman announced.

Growing health insurance market

The Indian health insurance market is poised for significant growth in the coming years.

According to Insights10, the market is projected to grow from $36.85 billion in 2022 to $82.5 billion in 2030, at a compound annual growth rate (CAGR) of 10.6%.

Statista Market Forecast predicts that the market size will reach $89.45 billion by 2024, with average per capita spending of $62.05.

In 2022, the Indian health insurance market size was valued at $12.86 billion.

The rising level of health insurance in India can be attributed to the rising costs of quality healthcare, rising income levels, longer life expectancy and the shift towards non-communicable diseases.

Moreover, the Covid-19 pandemic has heightened awareness of the unpredictability of life and the need to be financially prepared in the event of a medical emergency.

As a result, over the last two years, this has led to a significant transformation of the health insurance industry in India.

As a result, the total health insurance premium collected in India has seen a significant increase of around 25% during the year.

Driving forces of the growing health insurance market in India

Significant democratic factors, growing partnerships, expanding distribution networks and significant government initiatives underpin the growth trajectory of the Indian health insurance sector.

An example of this is the November 2021 agreement between the Government of India and the World Bank that injected $40 million to improve health services in Meghalaya, including the health insurance program.

In addition, the government extended the insurance coverage program for health care workers throughout the country for the amount of PLN 66.85 thousand. USD (50 lakhs) reflects the government’s efforts to provide access to healthcare.

Adopting universal health coverage, which aims to reduce health disparities and out-of-pocket health care spending, is a critical step toward making this vision a reality.

Moreover, the Indian insurance industry is witnessing a wave of innovative policies driven by rising incomes, growing purchasing power and household savings.

Market share information

The intensifying competition in the Indian health insurance market has prompted key players to make strategic maneuvers to strengthen their presence in the market.

Initiatives such as partnerships, collaborations and bringing innovative services to market are common strategies to meet the demand for high-quality, affordable health policies.

For example, in November 2022, Star Health and Allied Insurance introduced its Star Patient Care insurance policy, aimed at offering comprehensive health and wellness benefits at competitive prices. This policy aims to bridge the gap between inpatient costs and outpatient costs.

The last piece

Therefore, LIC’s strategic entry into the growing health insurance sector will benefit the company in manifolds.

First, it is in line with the evolving nature of healthcare in India, capitalizing on the growing demand for comprehensive insurance in the face of rising healthcare costs.

Secondly, by leveraging its established brand and extensive network, LIC can effectively penetrate untapped markets, thereby expanding its customer base and revenue streams.

Third, by diversifying its portfolio with health insurance products, LIC can mitigate the risks associated with life insurance market fluctuations, ensuring sustainable profitability and resilience.

LIC’s entry into the health insurance market will not only strengthen its market position but will also significantly contribute to improving healthcare access and financial inclusion in India.