Date:04/06/2006 URL: http://www.thehindubusinessline.com/2006/06/04/stories/2006060402810100.htm

Back LIC may not enter health insurance

Radhika Menon

Mumbai , June 6

The Life Insurance Corporation of India (LIC) is having second thoughts about its proposed health insurance venture. According to Mr T.S. Vijayan, Chairman, LIC, the corporation will not enter the segment unless it has the right business model.

"Health insurance is a very complicated area and stand-alone companies are following the business model of tie-ups with leading hospitals. As a PSU, partnering with only the top hospitals may not be suitable for LIC and currently that seems to be the only viable model," Mr Vijayan told Business Line. "LIC will be expected to be broad based and provide insurance even if the treatment is given in government hospitals." The corporation would enter the segment only if it hits upon the right business model, he said.

Credit card foray

Talking about LIC's future plans, Mr Vijayan, who took over as Chairman of the corporation recently, said that it would explore other business opportunities such as credit cards.

LIC had recently appointed international consultant KPMG to study the viability of the credit card business and is currently scouting for partners.

"KPMG has said that our partner should be someone who should be strong in technology and card issues but at the same time should not try to dominate LIC. The partner should not have the baggage of an existing credit card business in India." The card should distinctly project the brand of LIC, Mr Vijayan said.

On micro-insurance, Mr Vijayan said that despite IRDA announcing micro-insurance guidelines in November, insurers are finding it difficult to design suitable products.

"Designing a product has been a big challenge because the policy size has to be small and high distribution and service costs make it unviable," he said.

The policy would have to be priced appropriately so that poor people can buy it. At the same, it should offer sufficient cover and benefit to them. The corporation was struggling to find an appropriate business model, he said.