The Hindu Business Line : LIC keen on entering health insurance

Although health insurance was "most risky all over the world," LIC was still keen because of both customer expectations and existence of synergy between health and life insurance.

Chennai , Nov. 15

LIFE Insurance Corporation of India is keen on entering the health insurance sector, the Chairman, Mr A.K. Shukla, said today. However, the insurer is awaiting proper health regulations in place.

"This country does not have a health regulator," Mr Shukla observed, pointing out that the cost of treatment to an ailment could vary widely between hospitals.

Risky biz: Speaking to newspersons at the launch of LIC's e-Portal, Mr Shukla said health insurance was "most risky all over the world," but added that the corporation was still keen because of both customer expectations and existence of synergy between health and life insurance. He said that if priced properly, health insurance could be profitable.

He said the Insurance Regulatory and Development Authority (IRDA) had constituted a committee to look into the regulation of health services in India. LIC is awaiting the outcome of the committee.

Proper pricing: Mr Shukla said customers would accept "proper pricing" by LIC. He noted that they had no difficulty in accepting the reality when the corporation withdrew guaranteed returns on certain policies.

Answering a question, the Chairman said that although LIC had a paid-up equity of Rs 5 crore (against the IRDA-stipulated minimum of Rs 100 crore), the corporation had a solvency margin of Rs 21,000 crore. This represents the excess of assets over the actuarially estimated liabilities. He said the assets worked out to 122 per cent of the liabilities and pointed out that LIC was progressing towards IRDA's stipulation of 150 per cent.

In this context, he said the corporation had the backing of a government guarantee, and that in the last 49 years it had never had a need to invoke the guarantee. Besides, he said, the corporation had several hidden reserves. For instance, as of March 2005, its book value of equity investments was Rs 34,170 crore, but the market value was over Rs 62,000 crore.

Incidentally, equity investments worked out to 8 per cent of LIC's total investments of Rs 4.13 lakh crore.

Property development: LIC has identified 70 properties in the country, which it would develop as either commercial or residential real estates, for investment purposes.

"If the value of our investments go up, the policyholders stand to gain," Mr Shukla said.

He said a real estate consultant had been identified, but was not prepared to divulge the name.

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