Insurance In 2025: Cheaper Premiums, Faster Claims, And Smarter Coverage

• GST removal in 2025 sharply reduced insurance premiums and boosted product uptake.

• New Irdai rules cut waiting periods, speed cashless claims, and protect seniors.

• Labour codes expanded health checks and extended social security to gig workers.

• AI-driven underwriting and EV-focused motor insurance reshaped India’s 2025 insurance landscape.

In 2025, India’s insurance sector transformed: goods and services tax (GST) removal cut premiums, health-insurance rules sped up claims, AI streamlined underwriting, labour codes expanded medical and gig-worker coverage, and motor insurance embraced electronic vehicles (EVs), usage-based, and modular policies, boosting flexibility and innovation. We take a look.

Removal Of GST On Individual Premiums

One of the most significant shifts in the insurance sector this year was the removal of GST. The impact on consumer behaviour has been both immediate and meaningful. “With GST no longer impacting premiums, families are not only buying protection products more confidently but are also opting for riders and add-ons that were previously not chosen due to cost considerations,” says Amit Chhabra, CBO, general insurance, Policybazaar.

“Apart from tax relief, there is a broader regulatory shift: under the Insurance Laws (amendment) Bill 2025 (passed/planned in 2025), the sector’s Foreign Direct Investment (FDI) limit has been increased to 100 per cent, with composite licences, relaxed capital norms, and easier entry for insurers,” says Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI).

This could lead to more competition and innovation in life insurance.

Shorter Waiting Periods, Cheaper Premiums, And Quicker Claim Approvals

The Insurance Regulatory and Development Authority of India (Irdai) issued new health-insurance guidelines in 2025, removing maximum-entry-age restrictions. That means even senior citizens (above 60/65) can now buy new health insurance cover.

“The waiting period for pre-existing diseases has been reduced from four years earlier, now to three years in many policies,” says Bharindwal.

The claim-settlement process for cashless health insurance has been tightened: per 2025 rules, pre-authorisation for cashless claims must be approved within one hour, and discharge authorisation within three hours.

From 22 September 2025, individual health insurance premiums became exempt from GST - effectively reducing the cost for many buyers.

“For senior-citizen health insurance plans, premium increases at renewals are capped (insurers cannot increase premiums too steeply), helping make renewals more predictable,” says Bharindwal.

New Labour Codes Expand Health Checks And Social Security

The introduction of the new labor-law regime merges 29 older laws into four unified codes (wages code, social security code, OSHWC code, and industrial relations code). The aftereffect is two-fold.

All workers aged above 40 are to receive a free annual medical check-up provided and sponsored by their employer. “For certain categories like hazardous industries, these check-ups will now be mandatory for all age groups. Medical check-ups are related to health insurance, and the same can go hand in hand,” says Milind Tayde, head - employee benefits, Anand Rathi Insurance Brokers.

These laws will now help in the expansion of social security to gig, platform, and unorganized workers. “For the first time, gig-workers and platform-workers (Ola, Uber, Swiggy, Zomato, etc.) are now legally eligible for health insurance, accident insurance, maternity benefits, and old-age protection. This can be seen as a first step in widening India’s social security ecosystem,” says Tayade.

AI And Digital Tools Transform Insurance Underwriting And Claims

Digital integration evolved from being considered simply an online issuance of a policy to being the introduction of AI-enabled capabilities into underwriting and claims processing.

“Advanced algorithms that use a number of data sources, including the country’s national identity databases (e.g., Aadhaar) and available medical history databases, allowed for the ability to issue a policy immediately in most typical situations, resulting in a significant reduction in the time taken to acquire new customers,” says Arun Ramamurthy, co-founder, Staywell.Health.

Additionally, in relation to claims, these technologies will allow insurers to quickly identify and detect fraudulent activity as well as enable faster payment of legitimate claims.

EVs Drive Innovation In Motor Insurance Products

Motor insurance in 2025 saw the industry steadily move towards more personalised and usage-aligned protection, with growing consumer interest in modular covers and kilometre-based products. Customers are increasingly seeking flexibility in how they insure their vehicles - paying for relevant risks and actual usage rather than opting for uniform, one-size-fits-all policies.

“At the same time, rising repair costs driven by advanced vehicle technology, ADAS features, and expensive EV components have led to a clear shift towards deeper and more comprehensive coverage,” says Chhabra.

The electric vehicle segment emerged as a high-growth category, with increasing demand for battery protection and specialised EV add-ons as EV penetration expanded across metros and Tier-1 cities. Alongside this, new-age products such as short-term own-damage covers and long-term new-car policies gained visibility among consumers seeking greater pricing stability and flexibility.