The government-owned Life Insurance Corporation (LIC) is considering stepping into the health insurance sector and is currently looking at potential acquisition options, as per reports from The Times of India, quoting LIC chairman Siddhartha Mohanty. This decision aligns with a proposal to allow composite insurance companies in the sector.
Opportunities in Health Insurance Sector
“We anticipate the possibility of composite licenses being permitted by the new government, and we have done some preliminary groundwork. While we may lack expertise in general insurance, we are keen on health insurance and are exploring opportunities for growth through acquisitions,” stated LIC chairman Siddhartha Mohanty.
In February 2024, a parliamentary committee recommended the adoption of composite insurance licenses to reduce costs and regulatory burdens for insurance providers. Currently, life insurance companies are limited to offering extended health insurance benefits. Enabling life insurance companies to provide hospitalization and indemnity coverage would require an amendment to the Insurance Act.
LIC’s entry into health insurance is expected to expand coverage.
India’s insurance market remains largely under-penetrated, with less than 2.3 crore health insurance policies issued by the end of 2022-23, covering approximately 55 crore individuals. Government-sponsored initiatives covered nearly 30 crore individuals, while group insurance accounted for nearly 20 crore. Both the government and regulators are advocating for increased issuance of health insurance policies, with LIC’s potential entry anticipated to accelerate growth in this sector. According to Irdai data, life insurers issued fewer than 2.9 lakh new policies during FY23, covering almost 3 lakh lives.
LIC Q4 Results
Insurance giant LIC posted a modest 2% increase in net profit at Rs 13,763 crore in the fourth quarter ended March 2024, as the corporation set aside provisions for wage hikes.
The insurer had earned a profit of Rs 13,428 crore in the corresponding quarter a year earlier.
Total income during the reporting quarter rose to Rs 2,50,923 crore from Rs 2,00,185 crore in the same period of the preceding fiscal, as per LIC’s regulatory filing.
Income from first-year premium improved to Rs 13,810 crore in the latest January-March quarter against Rs 12,811 crore in the same period of the preceding fiscal.
Renewal premiums also saw an increase to Rs 77,368 crore compared to Rs 76,009 crore a year ago.
For the entire financial year ended March 2024, LIC earned a profit of Rs 40,676 crore compared to Rs 36,397 crore in the previous fiscal.
The total premium income for the year ended March 2024 was Rs 4,75,070 crore compared to Rs 4,74,005 crore in the year ended March 2023.
A total of 2,03,92,973 policies were sold in the individual segment in FY24 compared to 2,04,28,937 policies sold in the previous fiscal.
The board recommended a final dividend of Rs 6 per share for 2023-24 subject to approval of shareholders, LIC Chairman said.
“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.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
