Page 22 - The Insurance Times February 2026

Primary data was collected through open-ended Insurers are also broadening their horizons, expanding
questionnaires and informal semi-structured discussions. beyond traditional products to cover specific micro-insurance
Questions were deliberately non-directive to allow and emerging risks such as cyber threats-addressing
respondents to articulate their views. Responses were segments that were previously underserved.
analyzed using thematic analysis, allowing recurring
patterns and dominant narratives to emerge organically. At the same time, data-driven insights are enabling more
The secondary data basically for reference purpose were personalized products, enhanced customer experiences, and
taken from publically available industry reports. streamlined processes. These developments collectively
reflect a sector that is not only robust and stable but also
India's Current Position: Strengths and increasingly forward-looking, agile, and responsive to the
evolving needs of modern consumers.
Gaps
India's insurance sector today finds itself in an intriguing Yet, despite these notable advancements, several challenges
phase of development-neither nascent nor mature, but continue to limit the industry's path to full maturity.
somewhere in between, characterized by both promising Relatively modest insurance penetration reflects uneven
progress and persistent structural gaps. In FY 2024-25, the progress in awareness, affordability, and trust across
industry contributed 3.7% to the nation's GDP , yet still different socio-economic groups. Consumer confidence, in
significantly lower than the 8-12% penetration seen in particular, remains fragile. Delays in claims settlement,
advanced markets with global average figure being 7.3%. disputes over policy interpretation, and lack of transparent
The per capita premiums have risen from $78 in 2020 to communication contribute to scepticism, hindering deeper
$97 in 2025 but still far below the global average of $ 943 market engagement.
as per latest IRDAI annual report. These figures reflect a
market that is expanding but not yet operating at the scale Profitability in core insurance operation is still a challenge
or sophistication witnessed globally. for many insurers & they are managing the business on the
basis of surplus generated by investment income. This
One of India's most notable strengths lies in the resilience continued status can undermine long-term financial
of its insurance sector. Over the past 25 years post opening discipline. While risk-based pricing is increasingly recognized
up of the industry, not a single insurer has collapsed, as critical, it is not always consistently applied, occasionally
demonstrating the industry's ability to navigate even severe resulting in unsustainable price competition & discounts. The
economic shocks, including the 2008 financial crisis & the continued high cost of acquisition has attracted attention
pandemic in years 2020-22. At least around 25-30 in USA of the Government & regulator. There is a fair possibility of
& 8-12 UK insurance companies are known to have been getting back a regulation on capping of intermediation cost
liquidated, wound up, or entered insolvency administration , which was withdrawn two year back. Although, India's
in same time space. Much of this stability can be attributed regulatory framework continues to evolve, the overlap
to the regulatory framework put in place by IRDAI, which between prudential oversight and conduct requirements
has encouraged disciplined capital management and often generates operational inefficiencies and compliance
consistent industry standards, while simultaneously fostering uncertainties.
innovation through sandbox initiatives and digital-first
policies. Taken together, these challenges highlight a sector that

requires not just expansion, but thoughtful recalibration to
Technology has further transformed the sector. Partnerships
achieve sustainable, long-term growth.
with insurtech firms are redefining the way business
operation is being handled. India's InsurTech ecosystem has
attracted cumulative funding of over USD 2.7 billion across The Aspirational Maturity for India
start-ups and digital insurance ventures , a lead figure in For India to evolve into a truly mature insurance market,
APAC region . The current valuation of the insurtech the industry must adopt a holistic approach that goes
ventures is around USD 15.5 billion. A very visible impact beyond mere regulatory compliance and financial
has been seen in distribution space through online sales and performance. The respondents have a very strong & clear
near-instant policy issuance in retail line of business. The opinion that in a mature market, underwriting discipline
adoption of latest technologies such as IoT , AI & ML are in would form the foundation of profitability. Insurers would
progress even in underwriting , claim & fraud management. focus on technical pricing, data-driven risk assessment, and

20 February 2026 The Insurance Times