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State-owned Life Insurance Corporation (LIC) is not keen on a composite license but it is looking to buy less than 50 per cent stake in a standalone health insurance company to enter the health insurance segment such that they have a say in the management of the company, without having to run the company, sources in the know said.
"LIC doesn't need a composite licence.
"Even if it is introduced, they will not opt for it.
"They are looking to buy a stake in a standalone health insurance company where they will have a say in the management," the sources added.
“The health insurance sector has a lot of potential.
"Longevity is increasing, but diseases are also on the rise.
"Additionally, medical expenses are very high, so health insurance has significant potential.
"Less than 3 per cent of total healthcare expenses are currently covered by insurance,” the sources said.
Previously, during the post-earnings call for Q1 FY25, Siddhartha Mohanty, managing director and chief executive officer, LIC, had said the state-owned insurer is looking to acquire a standalone health insurance company in FY25 to enter the health insurance business.
“Rather than set up a vertical for insurance, we felt it would be better to acquire a company, allowing us to start selling health insurance across the country,” Mohanty had said.
Currently, there are six standalone health insurance companies – Star Health & Allied Insurance, Niva Bupa Health Insurance, Care Health Insurance, Aditya Birla Health Insurance, ManipalCigna Health Insurance, and Narayana Health Insurance.
The regulator has also recently granted permission to Galaxy Health Insurance.
Health is the largest segment within general insurance.
As of August 2024, the health insurance premium increased by 11.60 per cent year-on-year to Rs 49,520.64 crore, up from Rs 44,372.26 crore.
Meanwhile, speaking at the Insurance Summit organised by the National Insurance Academy, LIC’s Mohanty highlighted that technologies such as artificial intelligence (AI), Big Data, machine learning, and cloud computing have significantly improved industry processes.
However, he also pointed out several challenges for the industry, including data privacy, workforce adoption of technology, and the cost of technology impacting margins, among others.
“The rate of technological adoption varies across companies and regions.
"Smaller insurers or those in emerging markets may struggle to keep up with technological advancements, creating a divide in competitiveness.
"With increased digitisation comes the growing threat of cyberattacks, phishing, and hacking attempts targeting insurance companies, making the protection of systems from these threats crucial,” Mohanty said.
He added that insurers can address these problems by collaborating with technology providers to create scalable digital solutions for smaller players, ensuring that innovation benefits the entire industry.
Companies also need to adopt proactive cybersecurity measures like real-time threat monitoring, employee training in cyber hygiene, and regular security audits.
Mohanty also noted that digital customer onboarding and dynamic pricing can be greatly enhanced through Insurtech solutions.
