India’s insurance market lags in global penetration, but fintech innovations could unlock its growth by enhancing product offerings, digital infrastructure, and trust-building measures, according to industry officials at the India International Fintech Festival.
India’s insurance market still has room to grow, and fintech firms could help unlock that opportunity by tailoring products for the “missing middle” of consumers who can afford cover but do not find suitable options, Abhijit Phukon, an economic adviser in the finance ministry, said at the India International Fintech Festival on Friday. He said insurance penetration remains at about 4% to 5%, far below the global average, leaving scope for wider uptake if companies can improve product choice and awareness. According to the Department of Financial Services, the ministry’s nodal arm for banking, financial services and insurance, the policy focus is increasingly on technology, cybersecurity and easier access to financial services.
Phukon argued that fintech can do more than sell policies: it can lift productivity, cut costs and improve last-mile delivery as India pushes towards becoming a $30 trillion economy. He said the country’s much-vaunted financial inclusion drive should move beyond simply opening bank accounts and towards deeper usage, financial well-being and financial empowerment.
That assessment comes against a backdrop of sluggish insurance penetration. IRDAI’s annual report, as reported by Moneycontrol and Business Standard, showed penetration falling to 3.7% in 2023-24 from 4% a year earlier, even as premium collections rose. The government’s own 2024-25 sector note said India remained the world’s 10th-largest insurance market by nominal premium volumes, but density was still low at $97 and life and non-life penetration stood at 2.7% and 1%, respectively.
Phukon also urged India to widen access to artificial intelligence infrastructure, close skills gaps and strengthen links between industry and academia to prepare a future-ready workforce. On fraud prevention, he called for shared ecosystem-level safeguards rather than isolated responses by individual firms, saying AI should be part of the solution but deployed with proper guardrails. In a finance sector where digital public infrastructure has already helped scale payments and other services, he said the next phase should focus on open, collaborative platforms that improve trust as well as reach.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
