The Life Insurance Corporation of India (LIC) is gearing up for a significant change as it prepares to enter the health insurance sector. On March 20, 2025, LIC’s CEO Siddhartha Mohanty announced that the company is in the final stages of discussions to acquire a stake in a health insurance firm, with hopes of finalizing the decision before the end of the financial year on March 31.
In his remarks, Mohanty indicated that while LIC is exploring this venture, it will not seek a controlling stake of 51% or more in any health insurance company. “I am very much hopeful that within this financial year, before 31st March, some decision can be taken,” Mohanty stated. As the dialogue progresses, the precise company with which LIC intends to partner remains undisclosed.
Entering the health insurance sector appears to be a strategic move for LIC, which has a long-standing reputation in life insurance. Currently, LIC offers life insurance policies, pension plans, and investment-linked insurance but does not have any health insurance plans in its portfolio. The firm will face robust competition from established players in the market, including Star Health Insurance, Aditya Birla Health Insurance, Niva Bupa Health Insurance, and Care Health Insurance, among others.
Mohanty’s announcement came on the heels of a broader push by LIC to explore new growth avenues amid increasing competition in the insurance space. “Health insurance business entry is a natural choice for LIC,” he remarked during a press interaction, emphasizing the company's readiness to expand its services in response to growing consumer demand.
Furthermore, LIC is also in discussions with the Reserve Bank of India (RBI) regarding the issuance of longer-term bonds. Currently, bonds in India have maturity periods ranging from 20 to 40 years, but LIC is interested in exploring options for bonds with maturity periods of 50 years or even 100 years. Mohanty explained, “We are discussing this from time to time with RBI, and they are also considering this.”
The possibility of acquiring a stake in a health insurance company may involve significant financial implications, with reports suggesting that LIC could consider an investment of approximately 4000 crore rupees.
As for its stock performance, LIC's shares closed at 757.65 rupees on March 20, down 12.65 rupees, or 1.7%, on the Bombay Stock Exchange. This decline comes despite the overall interest in the company, as it navigates its way towards diversification across insurance products. LIC’s current market capitalization stands at approximately 4,79,213.45 crore rupees, with a 52-week high of 1221.50 rupees and a low of 715.35 rupees.
The discussions around entering the health insurance market coincide with LIC's recent financial performance. The company reported a remarkable 17% year-on-year increase in net profit for the third quarter of the financial year 2024-2025, which reached 11,669 crore rupees. In that same period, the net premium income experienced growth as well, standing at 1.65 lakh crore rupees, which is a 9% increase compared to the previous year.
LIC's strategy to enter the health insurance sector might not only bolster its financial growth but also enhance its brand value, given its status as India’s largest insurer. The entrance into this competitive arena is pivotal, especially as consumers increasingly seek comprehensive health solutions.
As the organization finalizes its plans, stakeholders remain optimistic about what an expanded LIC could mean for the insurance landscape in India. With strategic moves on both health and financial instruments, LIC is positioning itself for a more prominent role in consumer lives.
