LIC ready to unwrap health cover product

MUMBAI: Life Insurance Corporation of India (LIC) has finalised its health insurance product. The country’s largest financial institution aims to provide coverage before the end of this fiscal.

The entry of LIC into health is expected to shake up the business because LIC has the largest distribution force with over one million agents. However, unlike non-life insurance companies, which sell annual contracts, LIC will be selling long-term health plans.

The Insurance Regulatory and Development Authority (IRDA) had recently paved the way for life insurers to get into the health insurance business through long-term contracts. After easing of health insurance norms, private life insurance companies too have unfolded their plans for the health market, but none have the reach of LIC.

LIC officials say that there is a lot of synergy between the life insurance business and health business. Although the corporation does not expect health to be a very profitable business, it sees collateral benefits on account of health policies.

Selling health insurance is expected to be a door opener for insurance agents, as many are approaching non-life companies to buy health plans, while life insurance continues to be sold. This will also provide agents an additional line of activity. With competitive pressure prompting companies to reduce charges under unit-linked policies commissions are expected to come down even as premium values rise. Health insurance is expected to generate additional revenue for the agency force.

There are other advantages that LIC has over non-life companies in the health business. For instance, the corporation already has a network of empanelled physicians for pre-acceptance checks. Besides a nationwide branch network will make it easier to service customers.