Page 25 - The Insurance Times February 2026

level are steadily growing through collaborations between enhancing overall liquidity and depth, leading to a more
insurers and climate-tech start-ups. Embedded insurance is mature sector with balanced risk distribution.
another fast-rising area, where small, simple covers are built
directly into everyday digital journeys, whether it's an online The sector regulator, IRDAI has been given powers to
purchase, a ride-hailing app, a loan deal with a tech driven approve mergers between insurers and non-insurance
NBFC or an MSME payment platform. These models keep companies, supersede insurer boards if needed, regulate
costs low and make insurance a natural part of daily digital remuneration for agents/intermediaries, and extend
life. inspections to intermediaries. These changes streamline
operations, facilitate corporate restructuring, and reduce
Rather than retracing the evolutionary path of Europe or bureaucratic hurdles, making the sector more attractive for
the U.S., India can chart a more disruptive trajectory, one investments and mergers.
that blends technology, affordability, and accessibility to
create a fundamentally different insurance model. Such a Stronger IRDAI oversight ensures better governance,
strategy would strengthen the domestic market and, over transparency, and accountability, reducing misconduct risks
time, position India as an exporter of insurance technology, and building investor confidence. By broadening
regulatory innovation, and digital operating models that intermediary definitions (e.g., including managing general
other emerging markets could adopt. If India can show the agents and repositories), it expands service networks,
path in digital payments ecosystem through its ground- improving market efficiency and reach. This accelerates
breaking UPI technology, why not in insurance ? development through faster innovation in distribution
channels and business models, while promoting maturity via
Recent Regulatory Changes a robust regulatory framework that aligns with global
standards.
The Indian government recently passed the Sabka Bima Sabki
Raksha (Amendment of Insurance Laws) bill in December The enactment of DPDP Act has fulfilled a big gap which
2025. This legislation amends the Insurance Act, 1938; the was there earlier in Indian market. It would build trust by
LIC Act, 1956; and the IRDAI Act, 1999. It introduces several prioritizing data security and transparency, reducing disputes
reforms aimed at liberalizing the sector, enhancing and encouraging higher participation rates. Stricter
regulatory oversight, and prioritizing consumer protection. penalties deter violations, fostering a compliant, customer-
centric ecosystem. This drives market maturity through
The most talked about reform is about raising the foreign improved consumer confidence and ethical practices, while
direct investment cap to 100% that means allowing full supporting development by increasing demand, particularly
foreign ownership under the automatic route. The rules among price-sensitive segments, and enabling personalized
which followed the act relaxed norm on composition of board products via secure data usage.
which was an issue earlier. It is expected not only to attract
foreign capital inflows, estimated at Rs 35-70,000 crore in While not directly in the Bill, the recent GST exemption on
next three years but also bring in global expertise, advanced insurance premiums complements these reforms by
technology and innovative products tailored to underserved reducing costs. Combined with the Bill, this affordability
segments like rural and mass markets. This would fosters boost could stimulate demand in rural and mass markets,
market maturity by integrating India more into global addressing India's insurance gap. Analysts predict gradual
insurance ecosystems, enhancing risk management consolidation, new entrants, and job creation, with the
capabilities, and stimulating long-term economic resilience sector evolving toward innovative models like tech-
through broader coverage for households and businesses. integrated insurance. Challenges like uneven distribution
persist, but overall, these reforms position the market for
The second important change is to lower the entry barriers sustained growth, deeper penetration, and alignment with
by reducing the net worth requirement for reinsurance economic goals.
companies. This like a welcome note to international
reinsurers, improving the domestic market's capacity to The setting up of International Finance Service Centre at
handle large risks (e.g., natural disasters or mega-projects) GIFT City at Ahmedabad , is an another step in brining indian
and stabilizing premiums through better reinsurance insurance market much closure to world market. The special
support. This contributes to market development by & relaxed provisions at this particular facility offer
diversifying players, fostering grassroots innovation, and internationally aligned regulatory environment for

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