LIC Entering the Health Sector

Life Insurance Corporation also known as LIC, is looking to enter the health insurance sector and is currently exploring potential acquisition opportunities. “While we lack expertise in general insurance, we are interested in health insurance and are also considering opportunities for inorganic growth," said LIC chairman Siddhartha Mohanty. This initiative follows a proposal to introduce composite insurance companies in the industry.

According to the reports, a parliamentary panel suggested in February that composite insurance licenses be developed to save expenses and lessen the burden of compliance on insurers. At the moment, life insurance providers are limited to providing long-term health benefits. For them to offer hospitalization and indemnity coverage, the Insurance Act would need to be amended.

Moreover, the introduction of composite insurance companies can give consumers greater value and choice, such as a single policy that covers savings, health, and life insurance. Since consumers may obtain a single insurance policy from a single provider with cheaper rates and simpler claims processing, it can increase insurance awareness and reach in India.

India's insurance sector remains considerably underserved, with fewer than 2.3 crore health insurance plans issued by the end of 2022-23, covering around 55 crore people. Nearly 30 crore people were insured by government-sponsored programs, and nearly 20 crore by group insurance. Government and regulatory bodies are in favor of issuing more health insurance policies, and the arrival of LIC is anticipated to spur expansion in this industry. IRDAI data shows that during FY23, life insurers issued less than 2.9 lakh new policies, covering over 3 lakh lives.

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