As 2025 draws to a close, the Indian insurance industry has traversed a period of significant transformation - shaped by bold policymaking, strategic reshuffles among major players, and evolving customer needs. Two historic developments stood out as potential inflection points for the sector.First, the government’s decision to make Health, Personal Accident and Travel insurance fully exempt from Goods and Services Tax (GST) acknowledged insurance as an essential financial service. The move aimed to improve affordability for millions of households, even as the industry absorbed shifts in input tax credits and commission structures arising from the exemption.

Second, the Lok Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, raising the foreign direct investment limit in Indian insurance companies from 74 per cent to 100 per cent. This landmark liberalisation — part of a broader effort to deepen financial inclusion and attract long-term capital — is expected to unlock global expertise, heightened competition and faster innovation across life, general, health and reinsurance segments.

Continued Growth in Health Insurance Industry

Standalone health insurers recorded a robust 10.4 per cent year-on-year growth in premiums, reaching Rs3,622 crore, underscoring rising consumer demand and broader adoption of health insurance coverage. Total premium income is expected to reach Rs3.21–3.24 lakh crore, followed by a further growth of 10.9 per cent in FY27. Despite prevailing macroeconomic headwinds and cost pressures, steady improvements in insurance penetration and density indicate that the sector remains firmly aligned with the long-term vision of achieving “Insurance for All by 2047.”

Consumers increasingly opted for higher sum insured policies, family floaters, and value-added benefits such as wellness programs, OPD cover and maternity—reflecting a shift from price-led buying to need-based protection.

Digital Optimisation and Claims Efficiency

Digital transformation moved into a more mature phase in 2025.

•Over 90 per cent of retail policies are now estimated to be issued digitally across insurers.

•A growing share of health claims—60–70 per cent in urban markets—are processed through digital or cashless modes.

•AI-led claims triaging and fraud detection helped insurers reduce turnaround times and improve operational efficiency.

Technology increasingly became central to improving transparency, trust and customer experience rather than just driving cost efficiencies.

Distribution and Advisor Enablement

Distribution remained a key focus area as insurers worked to deepen penetration beyond metros. The industry today engages over 30 lakh licensed insurance intermediaries, with 2025 seeing heightened investments in advisor training, digital enablement and capability-building initiatives. These efforts were aligned with strengthening last-mile reach and improving customer understanding of insurance products.

Customer Experience and Profitability Balance

Customer experience emerged as a critical differentiator in 2025. Faster claims settlements, simplified products and clearer communication gained prominence as insurers responded to rising expectations. At the same time, claims inflation and healthcare cost pressures led insurers to sharpen underwriting discipline and focus on portfolio quality and sustainable pricing.

Focus on Inclusion and Purpose

The year also witnessed growing momentum around inclusive insurance. Products and initiatives addressing women’s health, senior citizens, MSMEs and first-time buyers gained traction, contributing to broader financial inclusion goals. Internally, insurers continued to strengthen commitments towards employee well-being, diversity and inclusive workplace policies.

These developments are expected to significantly accelerate the growth of India’s insurance industry while strengthening its ability to support the government’s and the regulator’s broader financial inclusion agenda. With improved capital availability, deeper distribution reach, enhanced digital capabilities and a sharper focus on customer-centric solutions, the sector is well positioned to expand protection to underserved and first-time insurance buyers. As insurers enter 2026, the emphasis will remain on building trust, improving accessibility and advancing the collective vision of a more inclusive and resilient insurance ecosystem for India.

(The writer is MD & CEO, Niva Bupa Health Insurance)