INDIA'S INSURANCE sector is on the cusp of a transformation, driven by advances in artificial intelligence (AI) and evolving policy discussions. Despite its burgeoning population and growing middle class, India has historically struggled with low insurance penetration, hovering at just about 4.2% of gross domestic product (GDP) as of 2021. However, the convergence of AI technology and potential policy reforms, such as the removal of GST on insurance premiums, could dramatically alter this trajectory.
AI has enhanced insurance access and inclusion. Tools like vernacular chatbots, voice assistants, and mobile platforms have helped engage rural populations. Predictive analytics has supported need-based product design, while machine learning has improved underwriting and fraud detection. A continued focus on simplicity and user experience could reduce the digital divide and increase access for all.
AI: The Game Changer
AI has emerged as a pivotal tool in addressing some long-standing barriers to deeper insurance penetration in India. Traditional insurance processes are often bogged down by lengthy paperwork and time-consuming verifications. AI-powered tools have simplified this by automating Know Your Customer (KYC) processes, using facial recognition, and validating documents in real time.
“AI technology can substantially contribute towards reducing the digital divide and enhancing the rural population's access to insurance. Phygital is the key to reaching out to the rural population, where insurance products are distributed through digital platforms without offices. However, insurance agents act as the key AI mediums for the end-to-end insurance process,” says Sarbvir Singh, Joint Group CEO of PB Fintech, an insurance platform. This has reduced the need for branch offices and has led to quicker processing, he adds.
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