The Insurance Regulatory and Development Authority of India (Irdai) is planning to allow life insurance companies to offer health insurance policies and it is expected to issue draft guidelines soon, according to a media report. The move is likely to reduce premiums and increase access to affordable health cover.
“Life insurance companies inherently get more customers than health insurers in the retail space, which will help them get more people covered under medical insurance at more affordable premiums,” according to the livemint report quoting a source. The report added that the Irdai’s internal committee has been discussing the proposal over the past few weeks.
Life insurance companies posted an 84 per cent growth in their cumulative new business premium at Rs 17,940 crore in April 2022, primarily helped by LIC, Irdai data showed. All 24 life insurers had collected Rs 9,739 crore as new business premium during the same month a year ago.
The largest insurer, state-owned LIC’s first year premium or new business premium more than doubled (at 141 per cent rise) to Rs 11,716 crore as against Rs 4,856.76 crore in April 2021, the Insurance Regulatory and Development Authority of India (Irdai) said.
Five standalone private sector health insurance companies posted a 29.14 per cent growth in their collective gross premium income during the month at Rs 1,550.14 crore, as against Rs 1,200.34 crore in the year-ago period.
Of the total 31 non-life insurance companies, 24 general insurers registered a growth of 23.57 per cent in their gross direct premium written in April at Rs 19,705.86 crore, according to data from the Insurance Regulatory and Development Authority of India (IRDAI).
Will It Benefit LIC?
The move is also expected to benefit LIC, whose shares are currently witnessing a continuous fall. Its shares were on Tuesday trading at Rs 666 apiece, against the IPO issue price of Rs 949 per share last month.
LIC had a 44 per cent market share in FY22 but has lost market share to peers over the last five years, J P Morgan highlights in its report. LIC’s retail premium is growing faster than the industry and is above the 2019 level. LIC is focused on addressing portfolio white spaces. It is making a distribution push as well in agency and other channels, opening upside risk- JP Morgan said in its report.
With 30 crore policyholders and the highest market share — 61 per cent in new business premium and 71 per cent in terms of the number of policies — LIC is the oldest and most trusted brand when it comes to insurance products. From insurance plans to money-back schemes to endowment policies, it offers a wide range of products for different age groups and types of customers.