The government-owned Life Insurance Corporation (LIC) is looking to foray into the health insurance sector, reports said on May 28. The insurer is currently assessing potential acquisition prospects.

It could explore inorganic options if such an opportunity arises, news agency PTI quoted LIC chairman Siddhartha Mohanty as saying.

The move comes amid a proposal to allow composite insurance companies in the sector. There are currently expectations that composite licences may be permitted by amending the Insurance Act. As per the Insurance Act, 1938, and the regulations of the Insurance Regulatory Development Authority of India (IRDAI), composite licensing for an insurer to undertake life, general, or health insurance under one entity is not allowed.

In February 2024, a parliamentary committee recommended the implementation of composite insurance licenses to reduce expenses and regulatory burdens for insurance providers. At present, life insurance companies are restricted to offering extended health insurance benefits. Enabling life insurance companies to furnish hospitalization and indemnity coverage would necessitate an amendment to the Insurance Act.

LIC's health insurance foray expected to boost coverage.

India's insurance market remains significantly under-penetrated, with less than 2.3 crore health insurance policies issued by the end of 2022-23, covering approximately 55 crore individuals. Government-sponsored initiatives covered nearly 30 crore individuals, while group insurance accounted for nearly 20 crore. Both the government and regulators are advocating for increased issuance of health insurance policies, with the entry of LIC expected to catalyze growth in this sector. According to Irdai data, life insurers issued fewer than 2.9 lakh new policies during FY23, covering almost 3 lakh lives.

Allowing composite licensing could provide further impetus to the insurance sector because of its various benefits. Such a move can cut costs and compliance hassles for insurers, as they can run different insurance lines under one roof.

It can also offer customers more choice and value, such as a single policy that covers life, health, and savings, the report tabled in Parliament had said.

It can boost insurance reach and awareness in India, as customers can get one insurance from one provider, with lower premiums and easier claims.

The committee are aware that to enable composite licensing in India, the government and the IRDAI are planning to bring amendments to the existing insurance legislation, it had said.

LIC Q4 Result
Insurance behemoth LIC on Monday posted a marginal 2 per cent increase in net profit at Rs 13,763 crore in the fourth quarter ended March 2024 as the corporation made provisions for wage hike.

The insurer had earned a profit of Rs 13,428 crore in the corresponding quarter a year earlier.

The total income of the insurer during the reporting quarter rose to Rs 2,50,923 crore from Rs 2,00,185 crore in the same period of the preceding fiscal, LIC said in a regulatory filing.

LIC's income from first-year premium also improved to Rs 13,810 crore in the latest January-March quarter against Rs 12,811 crore in the same period of preceding fiscal.

The income from renewal premiums in the reporting period rose to Rs 77,368 crore compared to Rs 76,009 crore a year ago.

During the entire financial year ended March 2024, the insurer earned a profit of Rs 40,676 crore as compared to Rs 36,397 crore in the previous fiscal.

The total premium income for year ended March 2024 was Rs 4,75,070 crore as compared to Rs 4,74,005 crore in the year ended March 2023.

A total of 2,03,92,973 policies were sold in the individual segment in FY24 as compared to 2,04,28,937 policies sold previous fiscal.

The board recommended a final dividend of Rs 6 per share for 2023-24 subject to approval of shareholders, LIC Chairman said.

"During the last year, we focused on making directional changes in our product mix and enhancing margins in the business. We have more than doubled our share of non-par business within our Individual business. Now, we intend to focus our strategic interventions to maximize our market share across categories," Mohanty said.