Mumbai: State-run Life Insurance Corporation is considering entering the health insurance segment and is exploring acquisition opportunities. The move comes amid a proposal to allow composite insurance companies in the sector.
“There is an expectation that composite licences may be permitted by the new govt, 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,” said LIC chairman Siddhartha Mohanty. In Feb 2024, a parliamentary panel had suggested introducing composite insurance licenses to reduce costs and compliance burden for insurers. Currently, life companies can only offer long-term benefit covers under health insurance. For life companies to provide hospitalisation and indemnity cover, an amendment to the Insurance Act would be required.
LIC’s health insurance foray expected to boost coverage
India is a highly under-penetrated insurance market and at the end of 2022-23, less than 2.3 crore health insurance covers were issued, covering 55 crore lives. Of this nearly 30 crore were covered by govt-sponsored business, while almost 20 crore were insured through group insurance. Govt and regulator are keen that more health covers are issued and LIC’s entry into the space is expected to spur that. Irdai data showed that during FY23, life insurers issued under 2.9 lakh new policies covering almost 3 lakh lives.
Mohanty’s remarks on Monday came while announcing LIC’s financial results for FY24. LIC reported a net profit of Rs 13,762 crore for the quarter ending March 2024, slightly higher than Rs 13,427 crore in the corresponding quarter of the previous year. Profits were impacted by a provision for wage revision, and lower margins were attributed to higher group business.
During the last fiscal year, the insurance behemoth reported an 11% increase in profit after tax (PAT) to Rs 40,676 crore.
LIC has recommended a final dividend of Rs 6 per share for the financial year 2023-24, subject to shareholder approval. Additionally, an interim dividend of Rs 4 per share was declared and paid during the year, bringing the total interim and recommended final dividend to Rs 10 per share.
“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 maximize our market share across categories,” Mohanty said.
