LIC looks to enter health insurance biz
Exploring inorganic growth in health insurance, says its Chairman
image for illustrative purpose
While we lack expertise in general insurance, we are interested in health insurance. Corporation has already done some internal groundwork on this. - Siddhartha Mohanty, Chairman, LIC, tells Bizz Buzz
LIC Chairman Siddhartha Mohanty said that the insurer would enter the health insurance segment and can explore inorganic options if such an opportunity arises.
The insurance major is waiting for the composite licence to be permitted by the new government which is likely to assume office by the second week of next month.
Talking to Bizz Buzz on the sidelines of a press conference here, Siddhartha Mohanty said, “we are planning to enter the health insurance in a big way through acquisition once we are allowed to go for composite products.”
Mohanty hinted that the Corporation has already done some internal groundwork on this.
“While we lack expertise in general insurance, we are interested in health insurance and are also considering opportunities for inorganic growth,” he admitted.
As per the Insurance Act-1938, and the regulations of the Insurance Regulatory Development Authority of India (IRDAI), composite licensing for an insurer to undertake life, general, or health insurance under one entity is not allowed. The government needs to amend the Insurance Act to allow composite licensing.
Right now, all the life insurers are selling health insurance product as benefit product, whereas the general insurers are selling it in the form of indemnity, which comprises the major chunk of health insurance industry.
In February, a parliamentary panel suggested the introduction of a composite licence for an insurer to undertake life, general, or health insurance under one entity to increase the penetration of insurance in the country.
The panel headed by BJP leader Jayant Sinha had suggested the government to introduce a provision of composite licensing for insurance companies and make the related amendment in legislation at the earliest. Observing that allowing composite licensing could provide further impetus to the insurance sector, owing to its various benefits, the report had said it can cut costs and compliance hassles for insurers, as they can run different insurance lines under one roof. It can also offer customers more choice and value, such as a single policy that covers life, health, and savings, the report tabled in Parliament had said.
Meanwhile, insurance behemoth LIC on Monday posted a marginal two per cent increase in net profit at Rs13,763 crore in the fourth quarter ended March 2024 as the corporation made provisions for wage hikes. The insurer had earned a profit of Rs13,428 crore in the corresponding quarter a year earlier. The total income of the insurer during the reporting quarter rose to Rs2,50,923 crore from Rs2,00,185 crore in the same period of the preceding fiscal.
LIC’s income from first-year premium also improved to Rs13,810 crore in the latest January-March quarter against Rs12,811 crore in the same period of the preceding fiscal. The income from renewal premiums in the reporting period rose to Rs77,368 crore compared to Rs76,009 crore a year ago.
During the entire financial year ended March 2024, the insurer earned a profit of Rs40,676 crore as compared to Rs36,397 crore in the previous fiscal. The total premium income for the year ended March 2024 was Rs4,75,070 crore as compared to Rs4,74,005 crore in the year ended March 2023. A total of 2,03,92,973 policies were sold in the individual segment in FY24 as compared to 2,04,28,937 policies sold previous fiscal. The board recommended a final dividend of Rs6 per share for 2023-24 subject to approval of shareholders, Mohanty said. Earlier, during the year an interim dividend of Rs4 was declared and paid to shareholders of the corporation. Therefore, he said, the total interim and recommended final dividend aggregates to Rs10 per share.
