LIC to enter health insurance market via private health insurer: Report

Earlier, LIC Chairman Siddhartha Mohanty had spoken about exploring "inorganic" options for the company's foray into the health insurance segment

Insurance behemoth Life Insurance Corporation of India (LIC) is planning to enter the health insurance segment through a private health insurer, Livemint reported on Friday. LIC is looking at acquiring one of the five private standalone health insurance firms, people associated with the company said.

The development followed days after LIC Chairman Siddhartha Mohanty had spoken about exploring “inorganic” options for the company’s new initiative.

"Internal work is going on,” he told news agency PTI in an interview on May 28, noting that the company will explore “inorganic growth” in health insurance.

For the LIC, a public sector undertaking, to enter the health insurance market, the existing insurance legislation would likely have to be amended. Under the current laws, the regulatory body Insurance Regulatory Development Authority of India (IRDAI) and the Insurance Act of 1938 do not allow composite licensing for an insurer to undertake life, general, or health insurance under one entity.

For this, a parliamentary panel had suggested introducing a composite licence to undertake all three segments under one entity, a move aimed at increasing insurance penetration in India.

Mohanty had noted that while the company is not an expert in general insurance, it can do health.

Growing interest in health post pandemic

The growing interest of the companies in the health insurance segment comes as the market is witnessing promising growth potential since the Covid-19 pandemic. Experts suggest that the global health pandemic has brought a renewed focus on health and segments like preventative health checkups.

Business Standard had earlier reported data from Policybazaar, which said there has been a significant surge in the uptake of Out-Patient Department (OPD) benefits among health insurance customers. The share of policyholders opting for OPD benefits grew to 20 per cent in the financial year 2023-24 (FY24) compared to just 5 per cent in FY21.

Overall, health insurers logged twice as much growth compared to the general insurance industry in FY24, a data released by the General Insurance Council said.