Life Insurance Corporation of India (LIC) is evaluating opportunities to venture into the health insurance sector, with potential acquisitions being assessed, reported The Times of India, citing LIC chairman Siddhartha Mohanty.

The news coincides with the proposal for composite insurance licences in the industry. 

Mohanty said: “There is an expectation that composite licences may be permitted by the new government, and we have done some internal groundwork. 

“While we lack expertise in general insurance, we are interested in health insurance and are also considering opportunities for inorganic growth.”

In February 2024, a parliamentary committee recommended allowing composite insurance licences, simplifying operations and reducing regulatory burdens for insurers.  

Life insurance providers are currently limited to offering extended health benefits, but not hospitalisation or indemnity coverage, which would require changes to the Insurance Act. 

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LIC’s entry into the health insurance market is anticipated to expand coverage in India.  

As of the end of the 2022-2023 fiscal year, less than 23 million health insurance policies had been issued, covering around 550 million individuals.  

Government-sponsored schemes and group insurance policies have provided coverage for nearly 50 million people combined.  

Both government and regulatory bodies are pushing for an increase in health insurance policy issuance, with LIC’s participation expected to spur growth in the sector. 

According to the Insurance Regulatory and Development Authority of India (IRDAI), life insurers issued under 290,000 new policies during the 2022-2023 fiscal year, covering nearly 300,000 lives. 

This news follows LIC’s recent financial update, where the company reported a 2% rise in net profit to Rs137.63bn ($1.65bn) for the quarter ending March 2024, up from Rs134.28bn in the same quarter of the previous year.  

“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 maximise our market share across categories,” Mohanty added. 

In March 2024, Narayana Health, a healthcare provider, announced its intention to launch a health insurance service by the first quarter of FY 2025.  

The company secured IRDAI’s clearance in January 2024 to foray into the health insurance space.