New Delhi: India’s largest insurance provider, the Life Insurance Corporation (LIC), is planning to enter the health insurance sector and is currently exploring potential acquisition opportunities. According to LIC chief Siddhartha Mohanty, this move aligns with a recent government proposal to permit composite insurance companies in the sector.
What are composite insurance companies?
To clarify, composite insurers are companies that offer a comprehensive range of insurance services, including accident, fire, health, investment, life, and pensions. Essentially, they serve as a one-stop shop for all your insurance needs. However, if you’ve dealt with insurance companies before, you might have noticed that you can’t purchase health or auto insurance from a life insurance company, and vice versa.
Current regulations prohibit insurance companies from offering both general and life insurance policies through a single entity. Instead, they must operate separate entities for each type of insurance, each with its own risk management and IT systems. This regulatory landscape could soon change.
A boost to health insurance penetration
In February 2024, a parliamentary committee recommended the implementation of composite insurance licenses to reduce costs and regulatory burdens for insurance providers. For life insurance companies like LIC to offer hospitalisation and indemnity coverage, an amendment to the Insurance Act would be required. Companies like LIC are anticipating these policy changes to expand their coverage.
These measures are also expected to boost the insurance market in India, which remains significantly under-penetrated. By the end of the financial year 22-23, fewer than 2.3 crore health insurance policies had been issued, covering approximately 55 crore individuals. For context, this represents less than 39% of the total population, compared to the global average of about 70 per cent.
Government-sponsored initiatives covered nearly 30 crore individuals, while group insurance covered nearly 20 crore. Both the government and regulators are pushing for an increase in health insurance policies, with LIC’s entry expected to stimulate 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.
India’s largest-life insurer, LIC, is eyeing an entry into the heath insurance sector. However, this is not such a straightforward path since this move will require a parliamentary amendment to allow insurers to sell life and health insurance, among other kinds of insurance covers. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
