INDIA ADDA – Perspectives On India

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Excellence in Insurance with Technology Driven Data

Excellence in Insurance with Technology Driven Data

The insurance industry in India is one of the world's fastest-growing industries. The Indian insurance industry is predicted to become the sixth-largest in the world during the next decade. With a large investment portfolio and comprehensive covering of personal and company risks, the sector provides financial stability while contributing to the country's economic progress. By 2026, India's insurance industry is anticipated to be worth US$ 222 billion. Insurance companies in India have come a long way and now offer a wide range of products to industries such as motor, agriculture, and health. The insurance industry is undergoing several transformations that are assisting insurers in staying relevant with changing times and the latest digital disruptions. The Indian insurance business is expected to grow and flourish significantly in the near future under the watchful eye of the IRDAI.

According to IRDAI statistics, insurance penetration in India would be 4.2% of GDP in 2021-22. The government advised insurance firms to create e-insurance accounts (eIA) for their consumers as the first step towards the dematerialization of insurance policies. It requested that corporations dematerialize new insurance policies by December 2022 and existing/old plans by December 2023. (It indicates that a person will no longer need to indulge in paperwork at the time of renewing the coverage). Furthermore, the government recommended the creation of Bima Sugam, a digital portal that unifies the whole insurance ecosystem on one platform, including insurance repositories, businesses, intermediaries, clients, and broker associations. Furthermore, the General Insurance Council (GIC) is working to streamline the hospital empanelment procedure in order to boost the percentage of cashless claims in health insurance.

Insurance Industry in India

A strong insurance industry encourages economic risk-taking since it offers some protection in the case of an unanticipated loss-causing occurrence. It also gives much-needed support to family members in the event of a loss of life or health. Because the assets under administration of insurance firms represent long-term capital, they also act as a pool in which to engage in long-term initiatives such as infrastructure development. The rise of InsurTechs, with their customised, on-demand, and speedier offerings, is forcing insurers to accept and implement new technology, processes, and tools, as well as reassess their long-term goals. As a result, insurers must look beyond traditional tools such as digitisation and legacy upgrading to develop new offers and solutions that will fuel innovation and growth.

Incorporating new technology necessitates a stronger digital infrastructure as well as increased knowledge of concerns like as cybersecurity threats. As a result, continual interaction of insurers, regulators, channel partners, and consumer associations is required to guarantee that these changes are easily implemented and result in overall sector growth.

Timeline of Insurance in India

Sector Composition

There are two sorts of insurance providers in India: public sector firms and private sector companies. There are seven public sector insurers (Life Insurance Corporation of India, General Insurance Corporation of India Limited, New India Assurance, United India Insurance Company Limited, The Oriental Insurance Company Limited, National Insurance Company Limited, and Agriculture Insurance Company of India Limited). Since 2000, private sector enterprises have been permitted to operate in India, resulting in increased competition and innovation. The General Insurance Corporation of India (GIC Re) is the sole national re-insurer. Other players include individual and corporate agents, brokers, surveyors, and third-party administrators who handle health insurance claims. Life insurance is the most important segment of the Indian insurance business, accounting for over 75% of total market share. Health insurance is the second-largest category, followed by automobile insurance. The Insurance Regulatory and Development Authority of India (IRDAI) regulates the industry.

Growing importance of InsurTechs in the ecosystem

With around 35% of the US$ 3.66 billion capital invested in the Asia-Pacific (APAC) region, India has emerged as the region's second largest InsurTech market. Three Indian startups have just joined the unicorn club. Additionally, there are already more than 140 InsurTech start-ups working in India. India has advanced by a decade in the adoption of the digital ecosystem during the previous two years. With the introduction of sophisticated data across commercial lines, the sector has experienced substantial disruptions in terms of digitally enabled processes. Predictive analysis, risk mitigation, fraud detection, and the volume and velocity of data availability are now considered standard. With smartphones becoming the go-to gadget for almost everything these days, customers demand the same convenience in the case of insurance. Consumers trust InsurTech firms because of their stringent security procedures while transacting online. By offering clients and service providers a simple, error-free, and secure method to conduct business, insurTech is revolutionising the insurance sector. Insurance businesses have to make investments in cutting-edge technology and develop solutions that are tailored to the demands of specific clients. Furthermore, regulators should be onboarded on growing and forthcoming platforms to streamline operations.

Source: Economic Survey 2022-23

As depicted in the above chart, penetration has grown from 2.7% in 2000 to 4.2% in 2020 before dipping to 3.2% in 2021 (post-coronavirus year).

InsurTechs potential Areas




A chatbot powered by Al might assist a potential client in navigating a website and selecting a purchase.


Insurance businesses acquire massive volumes of data, which may be leveraged to extract useful information about consumers and their needs using machine learning.


Devices that support the Internet of Things may be used to gather data and analyse risks using that data. Insurance firms may even consider giving potential consumers discounts for utilising such gadgets.

Smartphone Apps

Insurance applications (created for people and organisations) can aid in expediting the policy-selection process to make things simpler for clients and the insurer.


Drones can be used to conduct airborne surveys to evaluate properties in high-risk areas, such as those prone to earthquakes, liquefaction, erosion, or storm damage. Furthermore, they can be used to investigate and document construction or automobile crash sites.

Blockchain Technology

Blockchain technology increases data security standards and fosters confidence between insurers and insureds, all while lowering transactional costs. With the use of this technology, claims may be processed more rapidly and with better quality data being gathered.

Advanced Analytics

Insurance firms may gain better insights into client demands and deliver personalised goods and services by using data analytics. They can handle claims swiftly and personalise marketing for each client, giving them a competitive advantage over other insurers.

Embedded Insurance

The traditional insurance sector is being disrupted by insurance-as-a-service. Companies now include insurance coverage as part of their product or service. This allows clients to quickly receive the coverage they require while also purchasing another product or service.

Government Initiatives

  • Pradhan Mantri Jan Suraksha Bima Yojana

The Pradhan Mantri Suraksha Bima Yojana intends to offer Indians with accident insurance coverage. This plan is available to anyone between the ages of 18 and 70 who have a bank account. This insurance gives an annual cover of US$ 2,398.79 (Rs. 2 lakh) for total disability and death, and US$ 1,199.39 (Rs. 1 lakh) for partial disability. The policy premium is automatically deducted from the policyholder's bank account.

  • Pradhan Mantri Jeevan Jyoti Bima Yojana

PMJJBY is a Ministry of Finance insurance plan that provides life insurance coverage for any cause of death. It is a one-year cover that is renewed annually. The plan is offered and operated by LIC and other Life Insurance companies willing to offer the product on identical conditions with the requisite permissions and tie-ups with banks and post offices. Individual account holders of participating banks/post offices between the ages of 18 and 50 are eligible to participate.

  • Aam Aadmi Bima Yojana

It primarily applies to those between the ages of 18 and 59. The AABY insurance system is designed for all residents who live in the upcountry and in rural regions. It also applies to renters who are landless and live in both urban and rural locations. It also includes awarding scholarships to underprivileged students. The person protected by this plan is essentially the family leader or the breadwinner. The annual premium of 200 rupees is split evenly between the state and the national government. The family gets reimbursed at US$ 359.82 (Rs. 30,000) in the event of a natural death. However, if the death is caused by a lasting impairment, the family gets compensated with US$ 899.54 (Rs. 75,000).

  • Ayushman Bharat Yojana

Ayushman Bharat is a national health insurance plan run by the Government of India's Ministry of Health and Family Welfare. The Pradhan Mantri Jan Arogya Yojana (PMJAY) was established to give free healthcare services to more than 40% of the country's population. The plan provides US$ 5,996.97 (Rs. 5 lakh) in health insurance coverage. It covers drugs, diagnostic charges, medical care, and pre-hospitalization expenditures under this system. This healthcare initiative will aid India's poorest households.

  • Employment State Insurance Scheme

This is a multifaceted National Health Insurance Scheme since it provides social security as well as socioeconomic protection to all Indian employees. Furthermore, it gives the same benefits to those who rely on workers who are covered under this programme. Each worker's insurance coverage begins on the first day of insurable employment. They are given with comprehensive medical insurance for themselves and their families. On the other hand, persons covered by this programme (who are basically workers) are also eligible to a variety of monetary benefits. They include cash in times of bodily discomfort, such as sickness, or even when one becomes crippled, whether temporarily or permanently.

Road Ahead

Currently, India has around 50-60 insurance businesses, whereas the United States may have approximately 6,000 organisations. Notably, while India has the fifth largest economy, it ranks 15th in the general insurance industry. It is essential that every Indian has insurance coverage in terms of penetration. With the creation of new models, digital interventions are also anticipated to advance the insurance industry and drastically alter the insurance environment. The development of new technologies including artificial intelligence (AI), machine learning (ML), rule engines, and robotic process automation (RPA) is accelerating the settlement of insurance claims and the purchasing process. The Indian government has authorised foreign corporations to invest up to 49% in Indian insurance companies. This gives a chance for foreign insurance businesses to collaborate with Indian insurance companies to provide clients with a broader choice of insurance products and services.

Convenience, closely followed by personalisation, has emerged as the driving force in the insurance market. To achieve both, insurance companies are increasingly relying on advanced data and analytics. The government's effort to enable Jan Dhan, Aadhar, and Mobile (JAM) has made customers more comfortable than ever before in sharing their data with financial services companies. Furthermore, there is a wealth of data accessible through the Credit Bureau and other regulated platforms that insurers are reviewing in order to provide more customised products. Furthermore, market dynamics are bringing the prospect of mapping a client's social footprint in order to enable more personalised services and provide the best possible customer experience.