As 2025 approaches, the insurance industry stands at a transformative crossroads
Broad basing of health insurance, strong measures to push life insurance penetration, a move towards further digital leap and stronger corporate governance norms along with groundwork for the next round of growth in the insurance industry are the key trends that marked the year 2024.
“As 2025 approaches, the insurance industry stands at a transformative crossroads. Technology, driven by large data sets, is reshaping every aspect of our business and the future of insurance is being defined by those who innovate on, integrate with, and liberate customer encumbrances,’‘ Kayzad Hiramanek, Chief Operating Officer, Edelweiss Life Insurance said.
Insurers are rising to the challenge of thriving in a world where personalised solutions and communication, seamless digital experiences, and strategic partnerships are essential, he added.
The most significant development has been the broad-basing of health insurance, thanks to the Insurance Regulatory and Development Authority of India efforts. Effective from April 1, 2024, the regulator had removed the upper age age cap for seniors and this has shifted the focus to overcoming operational barriers and expanding the reach of health over.
With this, those who are above 65 years are now able to buy health products for all types of existing medical conditions. Since 2016, when an entry age of at least up to 65 years was mentioned by the regulator, the senior citizens had faced many problems with escalating medical inflation and the issue has now been addressed.
A transformative shift was the operational dynamics of life insurance’s new surrender value of exit payout norms. In June 2024, the IRDAI brought in new norms to guarantee a better exit payout for life insurance policy holders unwilling or unable to continue paying for their insurance.
According to Sumit Bohra, President, Insurance Brokers Association of India, in General Insurance, the Gross Direct Premium Income (GDPI) has increased by approximately 11.2 per cent compared to the previous year, primarily driven by the health segment, which saw a significant rise in premiums due to increased health awareness. “The State Insurance Plan has also been shown promising results,’‘ Bohra said.
How the key reforms of 2024 and their seamless adaptation by the industry will play out is what 2025 will see. It will also mean that there will be efforts to iron-out any challenges in the process and measures to cash in on any opportunities that thereby come knocking in. Industry experts believe that in the long-term both customers and the industry are to gain with the vision of Insurance for all by 2047 and the steps being taken towards achieving it.
At the policy level, 100 per cent Foreign Direct Investment in the Insurance sector, introduction of a composite product to all, all in one basic insurance and the complete rollout of the Bima Trinity as well as possible exemption of GST on health insurance will be main catalysts for growth going forward.
“The proposal to permit 100 per cent FDI in is a potential catalyst for capital infusion, innovation, and enhanced service standards. However, they also caution against the complexities it introduces, such as navigating domestic and international regulations, the risk of market saturation potentially stifling smaller domestic insurers, and the challenge for foreign firms to adapt to local consumer preferences.’‘ the IBAI President cautioned.
Without meticulous oversight, there’s a looming risk of market imbalance and monopolistic tendencies. Therefore, robust regulatory frameworks are imperative to safeguard local players and ensure equitable competition.
Technology will also have an increased role as embedded insurance is emerging as a powerful growth driver, revolutionising how coverage is delivered. By seamlessly integrating insurance products into non-insurance services, insurers are poised to enhance accessibility and convenience.
Strategic partnerships with sectors such as automotive, real estate, and healthcare will enable insurers to tap into real-time data, ensuring that coverage meets the immediate needs of customers at the moment of necessity.
“AI-powered solutions will be central to this transformation, automating processes and offering real-time, personalised experiences. By analysing context and individual customer needs, AI will provide tailored protection, making insurance an effortless part of daily life. This shift will redefine how consumers engage with insurance, creating a frictionless experience that is as natural as any other service they use regularly,’‘ Kayzad said.
With its latest reforms, IRDAI has underscored its agenda of sustained growth for the industry and insurance for all. Significantly, the focus on ensuring ease of business will bring a positive structural transformation. It is possible to expect higher capital inflows into the sector and also India is set to become one of the fastest growing insurance markets globally. So, there is more to come.