LIC gets ready for healthcare foray

KOLKATA: After ICICI Prudential Life and Tata AIG Life, it may be the turn of Life Insurance Corporation (LIC) to enter into the specialised pure health insurance products arena, better known as ‘benefit products’. The life behemoth is planning a comprehensive single health insurance product, which will be backed up by reinsurance in a couple of months’ time.

LIC’s entry is likely to push the health insurance market to beyond Rs 3,000 crore. This is after factoring in the standard mediclaim policies issued by general insurance companies. The scope of the healthcare market is estimated at around Rs 60,000 crore, of which barely 1% is covered by insurance. Moreover, over 80% of the market is indemnity-driven and is largely covered by mediclaim.

LIC was contemplating a foray into health insurance for a long time. It was looking at various options, including a joint venture with foreign participation, before deciding to set up a separate department for the purpose. This department, to be headquartered in Hyderabad, will be headed by an executive director.

“This will not be a company, but a department dedicated to health insurance and we plan to come up with health insurance products by July,” D K Mehrotra, managing director, LIC told DNA Money.

Once the activity picks up, LIC may take the opportunity of spinning it off into a subsidiary, he said.

While mediclaim policies issued by the general insurance companies are commonplace, LIC is likely to leverage the growing demand for specialised health insurance products from life companies.

“This will be a unique product, which will be moderately priced, and we will try to remove the deficiencies of a standard mediclaim policy with provision of benefits if the policyholder does not claim a certain amount. Moreover, it will be different from products of other life companies in the market at present,” G M Agarwal, chief actuary, LIC said.