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LIC awaiting regulatory clarity to re-enter mediclaim segment: Chief

Life Insurance Corporation (LIC) chairman MR Kumar said that the company is keen to re-enter the mediclaim segment. (Reuters)Premium
Life Insurance Corporation (LIC) chairman MR Kumar said that the company is keen to re-enter the mediclaim segment. (Reuters)

LIC chairman said that mediclaim policies are the best-selling insurance products in the country. However, in 2016, the Insurance Regulatory and Development Authority of India (Irdai) had asked life insurers to withdraw indemnity-based health plans from the market.

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Life Insurance Corporation (LIC) chairman MR Kumar said that the company is keen to re-enter the mediclaim segment when the regulator provides clarity on the issue, according to news agency PTI. He said that the insurance company is already offering a lot of long-term health protection and guaranteed products.

The agency reported that the mediclaim policies are the best-selling insurance products in the country. However, in 2016, the Insurance Regulatory and Development Authority of India (Irdai) had asked life insurers to withdraw indemnity-based health plans from the market.

Under indemnity-based health insurance plans, the life insurer provides reimbursement for the money spent on medical treatment up to the sum insured. For fixed benefit health insurance plans, a fixed amount is paid out of the sum insured for pre-determined illnesses or medical conditions.

Recently, the new Irdai Chairman Debasish Panda had said it was time life insurers re-entered the health insurance sector as he had given a mandate to the industry to ensure that every citizen has a health insurance policy by 2030. However, he later clarified that the regulator was only evaluating the pros and cons of allowing life insurers to sell health insurance policies and that no decision has been taken yet.

In most global markets, life insurers sell health policies. Currently, there are 24.50 lakh life insurance agents in the country, while there are only 3.60 agents in health insurance category. If life insurers are allowed to enter the health insurance sector, then the number of agents will go up by 600%.

However, there are some problems in the proposal, according to industry watchers. They say that the claims department in a life insurer is oriented towards payment on death or policy maturity, but health insurance claims are logged by around 7% of the insured during the year.

Countering this observation, others said that life insurers already have the necessary infrastructure in terms of policy servicing to offer these plans. Also, there is an opportunity to further elevate the experience from what it was before 2016.

These regulations vary from country to country. This concept already exists in some countries wherein life insurance companies are allowed to sell general insurance products.

According to PTI reports, LIC had registered a manifold jump in June quarter net income at 682.9 crore. The profit has gone up despite the insurer reporting low margins.


(With PTI inputs)


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