Life insurers are optimistic about the IRDAI giving them permission to sell health insurance amid the sweeping changes proposed by the regulator.

The Insurance Regulatory and Development Authority of India (IRDAI) has given an indication that it is exploring the possibility of life insurers selling indemnity health insurance.

A final decision on the matter is yet to be taken. Further, recommendations regarding composite licenses have been forwarded to the central government for evaluation.

Prior to 2016, life insurers in India had been selling indemnity-based health insurance policies. Changes in 2016 prohibited the exercise and instead life insurers were allowed only to sell fixed health benefit products such as critical illness and cancer cover.

In contrast, indemnity policies which work on a reimbursement or cashless basis were to be sold by general and standalone health insurance companies.

LIC, the country’s largest insurer, has already indicated its willingness to explore the segment. Other players have also indicated that there are significant upsides in terms of lower underwriting costs, which could be passed on to consumers in the form of premium benefits.

The contours of the regulations are not yet clear — whether life insurers will be selling the health policies of general insurers or design their own policies, with the latter being the preferred route for life insurance companies.

“Today if you look at the reach of life insurance companies, it is significant. If an individual already has life insurance, health insurance can also be pitched to that person (by the same company). This will also increase the insurance penetration,” Tarun Rustagi, chief financial officer Canara HSBC Life Insurance Company, told The Telegraph on Monday.

He added that depending on what is allowed, it could either be plain vanilla insurance products or combination products.

Industry officials warned there could be opposing voices, particularly from general insurance and standalone health insurance companies with claims that they have developed the expertise in the indemnity health space and should not be deprived of the benefits of their effort.