The insurance regulator has set up a panel to explore the possibility of LIC and other life insurance players offering indemnity-based health plans, opening up the market to intense competition.

The Insurance Regulatory and Development Authority of India (Irdai) has set up a nine-member committee comprising the heads of National Insurance Academy, LIC, Oriental Insurance, HDFC Life, HDFC Ergo, Star Health and Allied Insurance along with the secretary generals of Life Insurance and General Insurance Council to examine the feasibility of allowing life insurance companies to offer indemnity based health polices.

Health insurance plans are broadly categorized as “indemnity plans” and “defined-benefit plans”. While, indemnity plans reimburse hospital expenses, defined-benefit plans pay a lump sum amount irrespective of expense.

“Historically, health insurance is recognised as one of the most important elements of health care and health insurance premiums have been registering a significant compounded annual growth rate of around 20 per cent in the preceding 10 years in India,” said Irdai in a notification on Wednesday.

“Irdai (Health Insurance) Regulations 2016 allow life insurance companies to offer benefit based health insurance products only. Representations have been received from life insurance companies to allow them to offer indemnity products as well,” said the regulator. The committee is expected to submit its report in next two months.

The gross direct premium from health policies grew 21 per cent in 2018-19 to Rs 50.833.55 crore from Rs 41,980.56 crore previous year. There are 25 general insurance companies and seven standalone health insurance companies offering health plans.

Once approved, 24 life insurance companies, including LIC, could explore having health insurance products.