LIC Eyes Health Insurance Market With Strategic Acquisitions

LIC, with more than 1.41 million agents, has one of the largest agency forces globally.

Life Insurance Corporation of India (LIC), the state-backed life insurer, is actively seeking to enter the health insurance market by acquiring an existing health insurance company, as reported by TOI.

LIC's Managing Director and CEO, Siddhartha Mohanty, confirmed the move during the company's financial results announcement for the first quarter of the fiscal year 2025.

Mohanty highlighted LIC's strategic decision to purchase an existing health insurance company within the current financial year rather than establish a new health insurance vertical.

He stated, "Rather than set up a vertical for insurance, we felt that we can acquire a company which will allow us to start selling health insurance across the country."

This approach aims to expedite LIC's entry into the health insurance market, leveraging the existing infrastructure and expertise of an established player.

LIC, with more than 1.41 million agents, has one of the largest agency forces globally. These agents, who are currently distributing health insurance products for other private companies, are expected to transition selling LIC's health insurance offerings once the acquisition is finalized.

Indian regulations allow agents to work for both life and non-life insurance companies, providing LIC with a unique advantage as it expands into the health insurance sector.

Market Opportunities & Growth Potential

The health insurance sector is increasingly recognized as a 'pull' product, particularly among younger consumers who are proactively seeking coverage.

This trend presents a significant opportunity for LIC to capitalize on the growing demand for health insurance.

Moreover, this expansion is anticipated to positively impact LIC's life insurance business by diversifying its product portfolio and enhancing customer engagement.

Currently, the Indian market features five established standalone health insurance companies: Star Health & Allied Insurance, Niva Bupa, Aditya Birla Health Insurance, Care Health Insurance, and ManipalCigna Health Insurance.

Additionally, the regulator has recently granted permission to two new health insurers, Galaxy Health, and Narayana Health, further intensifying the competition in the sector.

LIC’s Financial Performance

In the first quarter of the fiscal year 2025, LIC reported a 9.6% year-on-year growth in net profit, with earnings reaching INR 104.61 billion, up from INR 95.44 billion in the same period last year.

The total premium income for the quarter increased by 15.7%, rising to INR 1.13 trillion, compared to INR 983.63 billion in the corresponding quarter of the previous year.

The acquisition strategy is part of LIC's broader efforts to maintain its leadership position in the insurance industry while expanding into new and growing segments such as health insurance.