Most people I know bought their health policy because someone asked them to. A bank manager mentioned it while the home loan was being sanctioned. An agent kept calling every March. A relative needed to hit a target. Comparing plans on their own, reading the exclusions, deciding calmly? Rare.
That is the habit InsurTech in India is going after, and the opportunity is large. Phones are everywhere, UPI works at the chai stall, and still fewer than 10 per cent of Indians are adequately insured. Few financial markets this size have that much unmet need.
Why insurance moved so slowly
Insurance is a hard thing to sell on a screen. Nobody wakes up wanting to think about hospital bills or accidents, and the document that covers them runs to thirty pages of waiting periods and sub-limits. So trust did the selling, and trust was built face to face, through agents, bank branches and brokers. That model worked in cities and thinned out fast beyond them.
Claims were the other sore point. Many people didn’t notice what their policy left out until they tried to make a claim. By then, it was already “too late”.
By around 2015, websites like Policybazaar let people compare term and motor insurance plans in one place. Acko and Digit came next, built for mobile from day one instead of patching old paperwork. By 2021, only a few “InsurTech companies” had crossed the USD 1 billion mark — and Policybazaar, Digit and Acko were among them.
That moment pulled insurance into the Indian startup ecosystem for good, with money, engineers and new expectations arriving together.
What AI in insurance really does
Much of what gets written about AI in insurance is vague. It is easier to see it job by job.
In underwriting, a model can read data a customer agrees to share, such as driving habits or health records, and price the risk more closely. A careful driver finally pays less than a careless one. Someone whose data looks worse pays more, and the industry has no settled answer yet on how fair that is.
In claims, software reads documents, estimates vehicle damage from photos and checks eligibility, so simple claims close faster and adjusters can focus on messy ones. McKinsey says claims management has become an important differentiator of profitability across general insurance. That fits what policyholders say. People rarely remember the sale. They remember how the claim went.
Fraud checks quietly matter more than they sound. Duplicate bills and doctored documents push premiums up for everyone honest.
Chat assistants now handle renewals and policy copies in several languages. They cope with easy requests. When you need a human and can’t reach one, they are a special kind of annoying.
This is insurance technology at its most useful: a claim paid on a Tuesday afternoon without twelve phone calls.
Insurance sold where you already are
Embedded cover is probably the clearest of the digital insurance trends. Travel insurance appears while you book the flight. Phone protection appears at checkout. A loan app attaches life cover to the loan. Payment apps with enormous user bases have joined in, and they can sell at a cost per customer that traditional distribution never reached.
It works for small, simple products. It works badly for complicated ones. A health policy with room-rent caps, co-payments and a long wait for pre-existing conditions can’t be explained in a pop-up, and forcing it into one is how mis-selling complaints are born.
If you follow the funding rounds, partnerships and regulatory moves behind all this, Malik Times keeps track of the business and technology side as it unfolds.
The regulator is pushing too
IRDAI has been nudging the industry toward technology for years, through a regulatory sandbox that lets firms test products under supervision and a stated aim of “Insurance for All by 2047”. Three pieces are worth knowing.
Bima Trinity covers Bima Sugam, Bima Vistaar and Bima Vahaks. The idea, as McKinsey puts it, is enabling innovation, expanding distribution reach and lowering the cost of serving customers. Bima Sugam is meant to be a single marketplace to buy, manage and claim policies across insurers.
100% FDI is now allowed under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. Earlier, the limit was 74%. The new rule took effect in February 2026 and covers both insurers and intermediaries under the automatic route. Foreign companies can now invest more in “India’s insurance sector” and bring in new technology. “IRDAI” will continue to monitor financial health, company management and customer protection.
AI oversight is newer. As of June 2026, IRDAI has set up a dedicated AI working group to decide how the industry should govern AI and manage its risks. Regulators don’t form working groups on things they consider settled.
Where it can go wrong
Data. Insurance companies hold sensitive details, including health records. If these details get leaked, customers may think twice before trusting the company again. Insurers also have to follow the Digital Personal Data Protection Act when collecting and protecting this information.
Fairness. An AI tool might charge someone more for insurance simply because of the area they live in or the job they do. Age can also affect its decision. If an application is “rejected” or the “premium” goes up, the customer deserves to know why.
Speed without care. Two taps to buy a policy is only good if the buyer knows what they bought. Faster claims are only good if valid ones aren’t rejected faster too.
People. Large parts of the country still want a person on the other end, and a good agent catches things an app doesn’t. Routine tasks can be automated — but when a case gets “complicated”, someone needs to step in and decide what makes sense.
What it means for founders, insurers and buyers
Founders could look at areas like “claims analytics”, “KYC checks”, “fraud detection”, and tools that help insurers assess risk. These may be better bets than selling policies directly to customers, which can get expensive fast. Building tools that insurers keep using may pay off over time.
Insurers need to decide if they should make their own systems, buy them or work with another company. Older systems can make things harder, and customers expect claims to be as easy as using any good app on their phone.
Buyers can use digital tools to compare and purchase, then do the dull part anyway: read the exclusions, waiting periods and claim process before paying. Check the insurer is registered with IRDAI. Keep documents together. Put any serious dispute in writing.
So where does this leave us
India doesn’t lack demand for insurance. Insurance still needs to earn people’s trust. Technology can make things simpler and help more people access insurance, but trust has to come first. It’s still too early to say whether AI will help people understand insurance better or simply make it easier to sell.
To keep up with the wider story, you will find related startup, funding and technology coverage from Malik Times at https://maliktimes.in/, including Malik Times Business News and Malik Times Technology News.
This article is for general information and is not financial or insurance advice. Policy terms and regulations change, so read your documents and speak to a licensed adviser before buying.
