LIC to explore composite insurance model once allowed, says MD & CEO

LIC may become a composite insurer offering general and health cover once Parliament clears the new policy, but has not finalised a health insurance acquisition plan

State-owned Life Insurance Corporation of India (LIC) will explore the possibility of becoming a composite insurance company—offering not only life insurance products but also general insurance, including health insurance—once the composite licensing policy gets a go-ahead in Parliament.

 

“What is in the public domain is that composite insurance may be allowed as a concept. If it is allowed, the LIC board as well as the shareholders will have to take a call as to whether we are going to continue as a life insurance company or whether we would like to modify or change ourselves into a composite company and enter general insurance as well. That call will be taken at that point of time,” R Doraiswamy, managing director and chief executive officer, LIC, said on Thursday.

 

The draft Insurance Amendment Bill, which seeks to amend various provisions of the Insurance Act, 1938—including raising the foreign direct investment (FDI) limit in the insurance sector to 100 per cent, reducing the required paid-up capital, and introducing provisions for a composite licence—has received approval from the Cabinet and the Department of Financial Services but is yet to be cleared by Parliament. Reports had suggested the Bill would be introduced in the monsoon session of Parliament. 

 

Separately, Doraiswamy said LIC is watching how the health insurance market is unfolding before taking a final call on acquiring a stake in a standalone health insurance company. LIC has been talking about acquiring a substantial stake in a standalone health insurance company as part of its proposed foray into health insurance, but has not yet signed a binding agreement with any company in that space.

 

“The health insurance market itself is undergoing a lot of changes and difficult times. So, we would like to watch how it goes forward before taking a final call. We are also expanding our options in terms of choosing the target company. We are waiting for the changes that are likely to happen in the near future,” he said, adding that the company is not at the stage where it has zeroed in on any company yet.

 

“We are looking at having a strategic stake in a (standalone) health insurance company. We are allowed, as an investor, to look at any investing company. But we have to take special permission for taking a stake higher than the regulatory limits,” he said.