(HT)
Union finance minister Nirmala Sitharaman on Wednesday directed public sector general insurance companies to ensure wider financial protection through more innovative products as general insurance penetration in India remains low at 1% of GDP compared to a global average of 4.2% in 2023.
Insurance density has, however, improved steadily, increasing from $9 in 2019 to $25 in 2023, a finance ministry statement said.
Sitharaman was chairing the review meeting of public sector general insurance companies (PSGICs) in New Delhi.
The finance minister emphasised urgent need for digital transformation across PSGICs to improve service delivery and efficiency.
This includes the adoption of AI-driven claim settlement systems, particularly for Motor Own Damage and Health insurance products, to ensure faster and more accurate claim resolution.
Sitharaman also directed the companies to develop innovative insurance products tailored to new and emerging risks, including cyber fraud, and to diversify their product portfolio in line with evolving consumer needs. The importance of robust underwriting practices and portfolio optimisation was also highlighted, with instructions to align combined ratios with global industry benchmarks to safeguard profitability and financial stability.
Customer-centricity was identified as a core focus area. Sitharaman directed PSGICs to promptly address grievances, strengthen social media engagement and ensure seamless integration with Account Aggregator system, including end-to-end digital Know Your Customer (KYC) processes. These are to simplify onboarding and improve customer experience.
To expand market reach and strengthen service accessibility, PSGICs were encouraged to pursue strategic collaborations with intermediaries, fintechs and insurtech firms to reinforce the nationwide presence of PSGICs and deepen insurance penetration.
Sitharaman also emphasised the importance of leveraging advanced data analytics and artificial intelligence to develop precise pricing models and efficient claims modelling, which are essential for improved risk assessment and long-term sustainability.
