Life Insurance Corporation of India (LIC) is set to acquire a stake in a health insurance company within the next two weeks, according to its Chief Executive Officer, Siddhartha Mohanty. The state-owned insurer is in the final stages of negotiations and expects to announce the deal before March 31.
“It is a natural choice for LIC to enter the health insurance sector. Discussions are in the final stage,” Mohanty stated while speaking at the GCA25 event on Tuesday.
LIC to Take Minority Stake, Not Majority Control
LIC has clarified that it will not acquire a controlling stake (51% or more) in the health insurer. The exact percentage of the stake acquisition will depend on LIC’s board decision and valuation factors, Mohanty explained.
Although Mohanty did not disclose the name of the target company, media reports suggest that LIC is eyeing a stake in ManipalCigna Health Insurance in a deal estimated to be worth ₹4,000 crore.
Health Insurance Expansion and Regulatory Challenges
Currently, life insurance companies in India are not permitted to offer full health insurance coverage, such as hospitalization expenses. While there have been discussions about introducing a composite license allowing insurers to offer both life and health insurance, no official announcement was made in the recent Union Budget.
By investing in a health insurance company, LIC aims to expand its presence in the fast-growing health insurance market without directly offering health policies.
Life Insurance Growth Slowdown and Industry Challenges
Apart from the upcoming acquisition, Mohanty addressed concerns about the slowdown in life insurance penetration in India. Despite efforts to improve insurance accessibility and regulatory flexibility, the industry has witnessed slower growth in recent months.
“This dual reality calls for a comprehensive review of LIC’s approach,” Mohanty said, emphasizing the need for actuarial insights to address emerging risks and maintain financial stability.
In Q3 of FY25, LIC reported a 9% decline in net premium income, which stood at ₹1.06 lakh crore. However, the company’s standalone net profit increased by 17% to ₹11,056 crore, showing a mixed performance.
Government Push for Increased Insurance Penetration
Speaking at the same event, Department of Financial Services Secretary M Nagaraju highlighted the role of actuaries in making insurance more affordable. He noted that scientific risk assessment could help lower premium costs and increase insurance penetration in India.
Currently, India’s insurance penetration rate stands at 3.7%, which is significantly lower than the global average of 7%. The government aims to improve this rate by encouraging better risk management strategies and expanding the insurance sector.
With LIC’s expected entry into the health insurance space, the company could play a key role in expanding coverage and increasing insurance accessibility in India.
