Insurance for all by 2047: Are we on the right path?

India today stands at an important turning point in its insurance journey. The country is already counted among the fastest-growing insurance markets in the world, yet penetration levels remain below the global average. What is more worrying is that the growth in penetration has shown signs of slowing down in recent years. The government has set a bold vision of “Insurance for All by 2047”, but achieving it will require consistent reforms and customer-centric innovation.

A vast untapped population and rising middle class present enormous opportunities, while friction in claims settlement, trust deficits, and high costs continue to challenge the sector.

The government and the Insurance Regulatory and Development Authority of India (IRDAI) have rolled out several initiatives to improve accessibility and affordability:

1. Digital Infrastructure: Digitisation is transforming how customers are onboarded, underwritten, and serviced. The Account Aggregator (AA) framework has further eased financial underwriting by allowing secure, consent-based access to verified customer financial data.

2. Bima Sugam: Envisioned as the insurance equivalent of UPI, this digital marketplace will connect insurers, distributors, and customers on one platform, making purchase, servicing, grievance redressal and claims settlement seamless.

3. E-KYC: Electronic Know Your Customer (e-KYC) simplifies onboarding using Aadhaar-based authentication. It reduces paperwork, cuts costs, and speeds up policy issuance, while ensuring regulatory compliance.

4. Bima Vistaar: A mass-market product designed to provide affordable life, health, and property coverage, particularly aimed at rural and underserved groups.

5. Bima Vahak: A women-led distribution channel that creates local representatives to sell and service insurance. It will improve awareness and reach in rural areas.

6. Awareness Campaigns: The proposed nationwide awareness campaigns by the Life Insurance Council and the General Insurance Council are expected to play a vital role in educating customers and building trust, thereby helping to significantly increase insurance penetration across segments.

Together, these measures lay the foundation for inclusive, affordable, and transparent insurance access.

1. Draft Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 and Relaxation of FDI Norms: The government has proposed amendments under the draft rules to allow up to 100% foreign direct investment (FDI) in insurance companies, along with easing the requirement that most directors, key managerial personnel (KMPs), and the CEO must be resident Indians. These reforms are expected to attract more global investors, enable fresh capital infusion, and support investments in innovation, technology, and growth while strengthening governance frameworks.

2. Exemption of Insurance Premiums from GST: The exemption of insurance premiums from Goods and Services Tax (GST) has been a landmark step to make insurance products more affordable and attractive for the masses. This move is expected to directly improve penetration by reducing the cost burden on policyholders.

IRDAI has actively reshaped regulations to balance consumer protection with market growth:

1. Corporate Governance: IRDAI has strengthened the board’s accountability, independence of key functions, and oversight. Key changes include: prior IRDAI approval for appointing the chairperson, making the CEO a whole-time director in all cases, mandating at least three independent directors at all times, enhancing the role and tenure of the Chief Compliance Officer, broadening independence of control functions, requiring ESG and stewardship frameworks, reducing auditor tenure, and restructuring the policyholder protection committee into a Policyholder Protection, Grievance Redressal and Claims Monitoring Committee chaired by an independent director.

2. Policyholders’ Protection: Stronger timelines for claim settlement, transparent disclosure of benefits and exclusions, and faster grievance handling.

3. Higher Surrender Value: Mandatory higher surrender values for traditional life policies, especially in the initial years.

4. Internal Ombudsman Framework: Insurers must appoint an independent ombudsman to review unresolved complaints before they escalate outside the company.

5. Expenses of Management and Commissions: The shift from commission caps to overall limit on expenses of management gives insurers flexibility in managing the expenses of management distribution cost.

6. Product Approval Simplification: Faster approvals for simple products and greater flexibility for insurers to design new offerings, enabling quicker market response.

Despite progress, the sector faces hurdles that must be addressed:

1. Friction in Customer Experience: Health insurance claims often become a battle between hospitals and insurers, with the customer stuck in the middle. This erodes trust, the very foundation of insurance.

2. Regulatory Fatigue: Frequent, sweeping changes, such as the recent requirement of higher surrender values, force insurers to redesign products and distribution at short notice, has raised compliance costs. Some of the regulatory changes, even though well-intentioned, have caused unintended consequences.

3. Complex Distribution Framework: While insurance in India is distributed through multiple channels such as agents, corporate agents, insurance brokers, insurance marketing firms, PoSPs, and web aggregators, the overlap leads to high costs, inconsistent customer experiences, and increased risks of mis-selling.

4. Embedded Insurance: – Embedding insurance in other services (like travel tickets or loans) is promising, but distributors and merchants need clear incentives to sell responsibly, and customers must be given transparency.

5. Health Data Gaps: The absence of a universal health ID and restrictions on using digital medical records for underwriting slow down efficiency and innovation.

6. Trust Deficit: Complex products and opaque exclusions mean insurance in India is often “sold, not bought.” This needs to change.

Looking ahead, several reforms are needed to achieve insurance for all by 2047:

1. Composite Licenses: Allowing insurers to operate across life, health, and general insurance will reduce fragmentation and promote comprehensive coverage and bring in synergy and lower costs.

2. Niche Insurers: Niche insurers can target specialised areas such as agriculture, cyber risk, or microinsurance.

3. Expanded Distribution: Letting insurers distribute other financial products could reduce customer acquisition costs and improve financial inclusion.

4. Resolving Hospital-Insurer Conflicts:  The proposed National Health Claims Exchange, overseen by IRDAI and the Finance Ministry, could help the claims settlement and improve the experience. The focus should shift from “who pays” to “how do we deliver affordable care together.” Insurance must evolve from being about settlement ratios to building trust ratios.

5. Plain-Language Products: Clear, modular products with simple wording and transparent exclusions will reduce mis-selling and increase the trust.

6. Embedded Insurance: Embedded products should be promoted with incentives for merchants and distributors of other products and services with an appropriate framework.

India’s insurance sector has travelled a long way but still faces deep-rooted challenges. Reforms such as building of digital platforms and infrastructure, governance measures, higher FDI limits, and customer-friendly product norms are important milestones. The sector must move further toward a simpler, more transparent, and trust-based model. The coming decade will decide whether insurance remains a financial product or evolves into a true pillar of social security for every Indian citizen.

About the authors: Ravi Bhadani is a Partner and Niharika Dungrakoti is a Senior Associate at SNG & Partners.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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