India’s insurance industry is at an inflection point. Not because of a single policy or a market event, but because two things are happening at the same time, the demand for insurance is growing fast, and the way insurance is discovered, distributed, and serviced is being rebuilt from the ground up.
For decades, distribution in India was built on personal relationships. Agents, brokers, bancassurance channels, and physical branches carried the entire weight of the market. Technology arrived first as a convenience layer, online quotes, digital policy issuance, mobile renewals. That was useful, but it was still the old model with a new coat of paint. What is happening now is fundamentally different. The real question is no longer whether technology will change insurance distribution. It already has. The question that actually matters is what distribution looks like when technology and genuine human advice work as one. That answer will decide whether India becomes one of the world’s most protected economies, or stays chronically underinsured.
To understand the scale of what needs to change, it helps to look at where things actually stand. India has made real progress. At the start of this century, insurance density was $9.70 per capita. Today it is around $97. Life insurance penetration has grown and the private sector has expanded significantly. But the gap between where India is and where it needs to be remains wide.
| 3.7%
India’s insurance penetration in FY25 vs global avg of 6.8% |
87%
National life protection gap Source: NIA Report 2023 |
40 Cr+
Citizens without basic health cover Source: NITI Aayog |
India’s insurance market is projected to grow from Rs 11.2 lakh crore in 2024 to Rs 25 lakh crore by 2030, according to the IBAI-McKinsey report. That is an extraordinary opportunity. But growth at that scale cannot come from selling more policies to the same customers in the same cities. India needs to reach first-time buyers in Tier 2, Tier 3, semi-urban and rural markets, and it needs to make insurance simpler to understand, easier to buy, and actually relevant to the risks people face. This is where technology becomes a genuine force multiplier rather than a cosmetic upgrade.
The first generation of InsurTech was about putting insurance online , comparison platforms, digital quotations, paperless issuance. It made things faster but did not fundamentally change what was being offered or to whom. The second generation is going much deeper. Technology is now touching every part of the value chain, from how customers are identified and risk is assessed, to how claims are processed and renewals are managed. India already has over 150 active InsurTech players with revenues reaching $0.9 billion in 2024, a tenfold increase since 2019. InsurTech is no longer a niche category. It is becoming part of the core architecture of the industry. The most successful players of the next decade, however, will not simply be those that sell insurance faster. They will be those that solve the actual structural problems , how to reach underserved markets, how to make risk advice affordable at scale, and how to build trust with customers who have never had a meaningful insurance conversation in their lives.
Which brings me to what I think is the most important point of all.
I met a textile manufacturer in Surat recently. Thirty employees, a plant worth Rs 2 crore, fifteen years in business. When I asked if he had insurance, he pointed to his car’s motor policy. That single exchange captures what the industry has been getting wrong for years. We built a system that is very good at selling products. We never built one that is good at giving advice. India has over 63 million MSMEs contributing 30 percent of GDP and employing over 110 million people. Fewer than 10 percent have any meaningful insurance coverage. Nearly 85 percent carry fire, theft, cyber, and business interruption risk entirely on their own balance sheets. They did not say no to protection. Nobody sat down with them to understand what they actually needed. This is not a distribution problem. It is an advice problem. And it is the most important thing the industry needs to fix.
Fortunately, the conditions to fix it are coming together. IRDAI’s Bima Trinity initiative is significant in this regard. Bima Sugam creates a unified digital marketplace. Bima Vahak builds a last-mile distribution force led by women across underserved communities. Bima Vistaar brings life, health, and property coverage under a single affordable product. Together, these create infrastructure that no single broker or insurer could have built independently. Any firm thinking seriously about the next decade should be building on top of it. The regulator’s direction and the market’s need are aligned for the first time. That alignment does not last forever. The firms that move now will define the next phase.
That next phase requires a fundamental shift in how the industry thinks about its role. The shift from transactional selling to genuine advisory is not a philosophical choice. It is a business necessity. The old model identify a risk, place a policy, collect commission, re-engage at renewal was designed for a different era. It cannot scale to reach the customers India needs to serve.
| HOW IT HAS WORKED | HOW IT NEEDS TO WORK |
| Sell a product and move on | Audit the client’s real risks first |
| Standard policy for everyone | Coverage built around actual exposure |
| Call back only at renewal | Proactive check-ins and claims support |
| Commission on placement | Value tied to outcomes |
Technology is what makes the advisory model financially viable at scale. Automated gap analysis, renewal tracking, fraud detection, document verification these tasks no longer need a person. That frees advisors to do what technology genuinely cannot: sit with a business owner during a claim, explain what their policy actually covers, and help them make a decision under pressure. The advisor does not become less important in this model. They become more important. But only if they are doing the right things.
Picture an advisor in a Tier 3 town running a five-minute risk diagnostic for a local business owner. They present clear options in the regional language. The policy is placed instantly. When something goes wrong, the claim is managed without the business owner having to chase anyone. Picture India’s 63 million MSMEs finally getting structured protection instead of a motor policy standing in for everything else. The next 200 million insured lives in India do not need a harder sales pitch. They need someone who understands what they are actually exposed to and knows how to protect them. The players who build for that reality will not just grow. They will define what insurance in India means for the next generation.
Authored by:
Akash Parwal
CEO
Square Insurance
