Sixty-eight years after it was established, Life Insurance Corporation of India, the public sector insurance behemoth, is on the prowl, exploring targets to acquire to step into the health insurance sector, its chairman Siddhartha Mohanty has told The Times of India.
“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.
LIC’s move comes against a backdrop of the policy proposal to allow composite insurance companies in this domain. Composite licences might help increase insurance coverage in India which lags many countries on this parameter. The government, on the other hand, wants to drive insurance coverage and has adopted the target of providing coverage for all by the centenary year of Independence.
LIC’s health insurance foray could raise the extent of coverage significantly.
Till the end of FY23, there were fewer than 2.3 crore health insurance policies which provided cover to approximately 55 crore individuals. Government-sponsored policies covered nearly 30 crore persons, while group insurance accounted for about 20 crore.
Both the government and regulator IRDAI are pushing for increased issuance of health insurance policies. The entry of LIC can only stimulate growth in this sector. Data from IRDAI indicate that life insurance companies sold fewer than 2.9 lakh new policies in FY23 which provide cover to about 3 lakh lives.
LIC’s website states that as on March 31, 2023, the number of its individual policies stood at 27.74 crore while its group policies provided cover to 8.8 crore lives.
The policy change for this move was made in February this year when a parliamentary committee recommended a regime change to introduce composite insurance licenses to reduce expenses and regulatory burdens for insurance providers. According to the current rules, life insurance companies cannot offer health insurance benefits. Needless to say, this new policy would require amendment to the Insurance Act.
LIC Q4 results
On May 27, 2024, LIC reported a 2% rise in net profit at Rs 13,763 crore in Q4 (January-March). The marginal rise has been attributed to provisions for wage hikes of the employees. The company had earned a PAT of Rs 13,428 crore in Q4 in 2023.
Profit for FY24 stood at Rs 40,676 crore compared to Rs 36,397 crore in FY23 – a rise of 11.7%.
LIC’s total income during the January-March quarter went up to Rs 2,50,923 crore – a 25.34% jump from the Rs 2,00,185 crore it earned in the corresponding quarter of FY23.
LIC reported improved results under the head “income from first-year premium” too. It increased to Rs 13,810 crore in Q4 against Rs 12,811 crore in the same period of FY23. Income from renewal of premiums in Q4 of FY24 inched up to Rs 77,368 crore compared to Rs 76,009 crore a year ago.
Total premium income for FY24 stood at Rs 4,75,070 crore as compared to Rs 4,74,005 crore in FY23. 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 Rs 6 per share for 2023-24 subject to approval of shareholders.
“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,” remarked the LIC chairman.