LIC Eyes Entry into Health Insurance Market Amid Record Dividend Payout
The government and regulatory authorities are keen to expand health coverage, and LIC's potential entry into the health insurance market is anticipated to support this initiative.
India's leading insurer, Life Insurance Corporation of India (LIC) has announced its intention to venture into the health insurance sector, exploring potential acquisitions to facilitate this expansion.
This move comes on the heels of a proposal aimed at introducing composite insurance companies within the industry.
On the move, Siddhartha Mohanty, chairman, LIC, said,"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."
Where All It Began?
In Feb 2024, a parliamentary panel had suggested introducing composite insurance licenses to reduce costs and compliance burden for insurers.
Currently, life insurance companies are limited to providing long-term health benefits, and an amendment to the Insurance Act is necessary for them to offer hospitalization and indemnity coverage.
The government and regulatory authorities are keen to expand health coverage, and LIC's potential entry into the health insurance market is anticipated to support this initiative.
Moreover, IRDAI data reveals that life insurers issued fewer than 290,000 new policies in FY23, covering nearly 300,000 lives.
Mohanty's remarks on Monday came while announcing LIC's financial results for FY24.
In a notable financial achievement, LIC proposed a record final dividend of INR 6 per share for the fiscal year 2023-24, with the payout record date set for July 19. This represents the highest dividend payout in the company’s history, doubling the INR 3 per share issued last year.
Additionally, LIC reported a slight 2% increase in net profit, reaching INR 13,763 Cr in the fourth quarter ending March 2024, compared to INR 13,428 Cr in the same quarter the previous year.
India's insurance market is under-penetrated. By the end of 2022-23, fewer than 2.3 Cr health insurance covers were issued, covering 55 Cr lives. Government-sponsored schemes covered nearly 30 Cr, while group insurance accounted for almost 20 Cr.
Established in 1956, LIC (Life Insurance Corporation of India) is an Indian public multinational public sector life insurance company headquartered in Mumbai. It is owned by the Government of India and operates under the administrative control of the Ministry of Finance.
LIC holds the distinction of being India’s largest insurance company and the largest institutional investor, managing total assets worth INR 49.24 trillion ($ 620 billion) as of March 2023.
