LIC Chairman: Potential Entry into Health Insurance and Inorganic Growth Opportunities

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LIC Chairman Announces Plans for Health Insurance and Potential Inorganic Growth

LIC Chairman Siddhartha Mohanty has revealed that the insurer plans to enter the health insurance segment and may explore inorganic growth opportunities if they arise.





Exploring Composite Licensing

There are expectations that composite licenses may be permitted by amending the Insurance Act. Currently, as per the Insurance Act of 1938 and the regulations of the Insurance Regulatory and Development Authority of India (IRDAI), composite licensing for an insurer to undertake life, general, or health insurance under one entity is not allowed.

While LIC is not specialized in general insurance like fire and engineering, it is capable of providing health insurance. Mohanty shared that internal work is ongoing, and the company will explore inorganic growth in health insurance if opportunities present themselves.

Legislative Changes and Potential Impact

In February, a parliamentary panel suggested the introduction of composite licenses to allow insurers to undertake life, general, or health insurance under one entity, aiming to increase insurance penetration in the country. The panel, headed by BJP leader Jayant Sinha, recommended the government introduce this provision and amend the related legislation promptly.

The panel’s report suggested that composite licensing could provide significant benefits, such as cost reduction and simplified compliance for insurers, who could operate different insurance lines under one roof. For customers, it could mean more choices and value, like a single policy covering life, health, and savings. This change could also boost insurance reach and awareness in India, offering customers lower premiums and easier claims processes.

LIC’s Financial Performance

Meanwhile, LIC reported a marginal 2 percent increase in net profit at Rs 13,763 crore for the fourth quarter ended March 2024, compared to Rs 13,428 crore in the corresponding quarter of the previous year. This increase comes as the corporation made provisions for wage hikes.

The insurer’s 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 previous fiscal. LIC’s income from the first-year premium also improved to Rs 13,810 crore in the latest January-March quarter, up from Rs 12,811 crore in the same period of the preceding fiscal.

Income from renewal premiums rose 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, up from 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 the previous year. A total of 2,03,92,973 policies were sold in the individual segment in FY24, slightly down from 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 shareholder approval. An interim dividend of Rs 4 was declared and paid earlier in the year, bringing the total interim and recommended final dividend to Rs 10 per share.

Conclusion

LIC's foray into health insurance and exploration of inorganic growth opportunities signal the insurer's commitment to expanding its offerings and enhancing its market position. The potential for composite licensing could further revolutionize the insurance landscape in India, benefiting both insurers and customers.

Disclaimer
The information provided in this article is based on current reports and statements from relevant parties. Details and plans mentioned are subject to change based on further developments and official announcements from LIC and regulatory bodies. Please refer to official sources for the most accurate and updated information.







 

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