Health insurance next for LIC? Top boss says insurer mulling scope, may look at acquisitions

State-run Life Insurance Corporation (LIC) is mulling a foray into the health insurance segment in line with a proposal to allow composite insurance companies in the sector.

LIC chairman Siddhartha Mohanty said the insurer has done some internal groundwork and considering opportunities for inorganic growth. He said LIC may also explore scope via acquisitions, according to a TOI report.

In February 2024, a parliamentary panel proposed composite insurance licenses to cut costs and ease compliance for insurers. Firms, at present, can only offer long-term benefit covers under health insurance; offering hospitalization and indemnity cover would require amending the Insurance Act.

India's insurance market is under-penetrated. By the end of 2022-23, fewer than 2.3 crore health insurance covers were issued, covering 55 crore lives. Government-sponsored schemes covered nearly 30 crore, while group insurance accounted for almost 20 crore.

The government and regulators aim to boost health coverage, and LIC's entry is expected to drive growth. IRDAI data shows life insurers issued under 2.9 lakh new policies in FY23, covering almost 3 lakh lives.

The state insurer LIC reported better-than-expected Q4FY24 performance, bolstering long-term positive sentiment among brokerages.

JPMorgan analysts maintained an 'overweight' rating with a target price of Rs 1,340 per share, suggesting a 29% upside. "LIC stock is inexpensive with strong growth potential. Market share gains are a key catalyst," they noted.

Citi analysts issued a 'buy' call with a target price of Rs 1,295 per share, indicating a 25% upside. They await further clarity on the movement between mark-to-market and core embedded value for FY24.