LIC says health insurance foray delayed on likely policy change; open to ‘all options’

Mumbai: Life Insurance Corporation of India’s (LIC) foray into health insurance is delayed due to likely regulatory and policy changes in the broader sector and due to the weak growth environment in the segment, its newly-appointed managing director R. Doraiswamy said on Thursday. 

As such, the country’s largest insurer remains interested in the health insurance segment and has kept “all options” open, including waiting for the rollout of the composite licence provisions, Doraiswamy said. The public sector behemoth may mull picking up a strategic stake in a health insurer till the time composite licences are given, he added.

“We are making further examination of the various options available to us. We are also awaiting the changes to the regulations as well as the statutes, which I think is currently being delayed. We would like to look at all the options and then take it forward,” Doraiswamy said in the insurer’s Q1FY26 earnings conference. 

He added that the industry is “undergoing some changes” and is also expecting some more to be announced. These changes include the expected reforms under the Insurance Amendment Bill, which is pending with Parliament. 

Open to composite licence

If allowed, LIC is open to getting a composite licence, which will enable it to directly sell health insurance products. The Insurance Regulatory and Development Authority of India (IRDAI) has proposed rolling out a composite licence that will allow insurers to sell all life, general and health insurance policies. 

As such, even if composite insurers are allowed, LIC will continue to focus on its core strength of life insurance as of now, he said adding that picking up a significant stake in a health insurer could be an option. 

“What is in public domain is that composite insurance may be allowed as a concept. If that comes and if LIC decides to become a composite company, then we can start marketing our own products. Till such a time, having a strategic stake in a health insurance company is very much an option available to us. That was what we were examining and that option is still open to us,” he said.

Doraiswamy took charge as the managing director and chief executive officer of LIC on 14 July. 

LIC has not zeroed in on a target health insurance company and is expanding its options in terms of choosing the right company. The insurer, under former MD Siddharth Mohanty, had said it will acquire a strategic stake in a health insurance company in FY25, an option that still appears to be open. 

Strategic stake

“For us to look for a foray into health insurance, we need not directly sell health insurance products. We were looking at having a strategic stake in a health insurance company that we are very much allowed as an investor…the only question is the IRDAI regulations,” Doraiswamy said, adding that this will involve getting the regulator’s nod to acquire a stake higher than what is allowed under insurance regulations. As the largest state-owned insurer, LIC is governed by both the LIC Act as well as the Insurance Act.

“We are closer to seeing what are the changes that are expected to come. That is one of the cases. Also, the health insurance market itself is undergoing a lot of changes at a difficult time. So, we would like to watch how it goes forward before taking a final call,” he said.

Asked about the government’s plan to offload about 6.5% of its stake in LIC by 2027 through an offer for sale, Doraiswamy said this is a call that will have to be taken by the department of investment and public asset management (DIPAM) and LIC has not heard anything on the issue so far. The government plans to dilute its shareholding in LIC to around 90% from the current 96.5%.

The life insurer posted a 5% year-on-year rise in its net profit for the June quarter to ₹10.986 crore, largely led by steady growth in premium income and a strong rise in the value of new business margins. Total premium income rose 4.8% on year to ₹1.2 trillion, led by 6.4% growth in individual premium to ₹71.474 crore and 2.5% rise in group premium to ₹47,726 crore.