Insurers to double down on technology, rural expansion for growth in 2025

Industry will also focus on strengthening distribution networks and human capital

The Indian insurance industry is set to focus on customer-centric technological adoption and expanding into rural areas to drive growth in 2025. These initiatives are planned amid anticipation of policy-level changes, including potential increases in foreign direct investment (FDI), amendments to insurance regulations, and revisions in goods and services tax (GST) rates, industry insiders said.

 

The much-awaited launch of the Bima Sugam is also expected this year.

 

“Insurers will prioritise digital transformation by adopting cutting-edge tools like Generative AI (Gen AI) and machine learning (ML) to enhance underwriting, claims processing, and customer engagement proactive support systems will replace reactive models, ensuring seamless customer interactions,” said Tapan Singhel, MD &CEO, Bajaj Allianz General Insurance.

 

Apart from technology, the industry insiders said the future growth of the sector will depend on the ability of insurers to penetrate the rural areas.

 

“To penetrate these geographies, insurance companies will need to build simple, easy-to-understand, byte-sized product sachets and deliver them through phygital outreach. From a regulatory standpoint, on the back of open architecture for banks, individual agents too should be permitted to sell products of more than one insurer,” said Rushabh Gandhi, MD & CEO, IndiaFirst Life Insurance.

 

The industry will also increasingly focus on strengthening distribution networks and human capital.

 

“As we deepen our presence in Bharat (Tier-II/III cities and towns), we continue to invest in deepening our distribution presence through branches, people, and technology assets,” said Niraj Shah, Executive Director & CFO, HDFC Life.

 

At the policy level, the insurers are awaiting changes raising FDI to 100 per cent in the sector, the introduction of a composite licence, exemption of GST on life and health insurance products along with the progress in the insurance regulator’s flagship - Bima Sugam and other accounting reforms.

 

The insurance regulator plans to launch Bima Sugam by April 2025 and introduce the international financial reporting standards (IFRS) accounting norms for Indian insurers by the end of FY25. Meanwhile, the tenure of the current Irdai Chairman Debasish Panda will end in March 2025.

 

The life insurance industry has seen a series of regulatory interventions on the product and distribution front in the last year or two, Narendra Ganpule, Partner, Grant Thornton Bharat, said, adding some more changes are already mooted and expected to unravel during this year.

 

“These past and impending changes have materially altered the operating model of the companies….The Insurance Amendment Act will truly set the tone for the future. Provisions like composite licence may potentially lead to a major shake-up in the sector, said Ganpule.

 

Even as insurers await regulatory changes, adapting to frequent changes and maintaining compliance are costly and time-consuming. Lack of talent, rising fraud, and cyber threats are also concerning.

 

“Fraudulent claims and data breaches are increasing with digitalisation and cyberattacks on sensitive customer data can erode trust. Insurers need to implement machine learning algorithms to identify suspicious patterns in claims, invest in advanced encryption, regular audits, and employee training on data protection and educate customers on cybersecurity best practices,” said Sharad Mathur, MD & CEO, Universal Sompo General Insurance. 

Growth plans

 

> Adoption of AI, ML for better underwriting, claims, and customer engagement

> Simple products and phygital outreach to drive rural penetration

> Investments in Tier-II, -III cities, workforce, and tech assets

> On the policy front, they eye FDI hike, composite licenses, and GST exemption