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LIC keen to re-enter mediclaim segment, awaiting regulatory clarity: Chairman

Insurance behemoth Life Insurance Corporation (LIC) is keen to re-enter the mediclaim segment as and when the regulator provides clarity on the issue, its chairman has said.

“We are already doing a lot of long-term health protection and guaranteed health products. And we are evaluating the suggestion that the regulator Irdai made recently,” LIC Chairman M R Kumar told PTI when asked about the same during its earnings call over the weekend.

The chairman further said, “I don’t think it will be difficult for us as we already offer some of the health products.”

Mediclaim policies, which are indemnity-based health plans, are the best-selling health insurance products in the country. However, in 2016, the Insurance Regulatory and Development Authority of India (Irdai) had asked life insurers to withdraw indemnity-based health plans from the market. Life insurers since then have been allowed to offer only fixed benefit health plans.

Under indemnity-based health insurance plans, the insurer provides reimbursement for the money spent on medical treatment up to the sum insured. For fixed benefit health insurance plans, a fixed amount is paid out of the sum insured for pre-determined illnesses or medical conditions.

Recently, the new Irdai Chairman Debasish Panda had said it was time life insurers re-entered the health vertical as he had given a mandate to the industry to ensure that every citizen has a health insurance policy by 2030.

However, Panda later clarified that the regulator was only evaluating the pros and cons of allowing life insurers to sell health insurance policies and that no decision has been taken yet.

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Globally, in most markets, life insurers sell health policies.

Currently, there are 24.50 lakh life insurance agents in the country, while the there are only 3.60 lakh agents in the general and health insurance category. If life insurers are allowed into the health insurance sector, the number of agents will jump by 600 percent, increasing health insurance penetration significantly in the country.

However, according to industry watchers, there are some difficulties in the proposal. For instance, the claims department in a life insurer is oriented towards payment of the claim on death or policy maturity but health insurance claims are logged by around 7 per cent of the insured during the year.

But others counter that life insurers already have the necessary infrastructure in terms of distribution and policy servicing to offer these plans. In fact, this is an opportunity to further elevate the experience from what it was before 2016 when these policies were being offered by life insurers.

Though regulations vary from country to country, the concept of composite insurance companies exists in some countries wherein life insurance companies are allowed to sell both life and general insurance products.

Over the weekend, the national insurer LIC had reported a manifold jump in June quarter net income at Rs 682.9 crore, driven by record premium income, as against a paltry Rs 2.94 crore a year ago.

The profit rose despite the insurer reporting lower margins, which the management attributed to changed product mix and booking less than 50 per cent of the profit from equity which plunged to Rs 5,076 crore from Rs 11,368 crore in June 2021.

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But a record 61 percent jump in new policy sales buoyed the bottom line, Chairman Kumar had told reporters at the earnings call.

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