Summary of this article
Policy reforms, FDI liberalisation reshaped insurance landscape
Health insurance demand, digital adoption accelerated in 2025
Customer focus and sustainable growth took centre stage
As 2025 draws to a close, the Indian insurance industry has traversed a period of significant transformation, pointing to a year shaped by bold policymaking, strategic reshuffles and rapidly evolving customer needs. “The focus has clearly shifted towards consolidation, sharper customer orientation and sustainable growth,” says Krishnan Ramachandran, MD & CEO, Niva Bupa Health Insurance.
According to Ramachandran, two policy developments stood out as defining moments for the sector. “The government’s decision to make health, personal accident and travel insurance fully exempt from GST acknowledged insurance as an essential financial service,” he says. The move, he adds, was aimed at improving affordability for millions of households, even as insurers adjusted to changes in input tax credits and commission structures following the exemption.
The second inflexion point came with the passage of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which raised the foreign direct investment limit in insurance companies from 74 per cent to 100 per cent. “This landmark liberalisation is expected to unlock global expertise, heighten competition and accelerate innovation across life, general, health and reinsurance segments,” Ramachandran says, adding that it also aligns with the broader objective of deepening financial inclusion.
Growth in the health insurance segment remained steady through the year. “Standalone health insurers recorded a robust 10.4 per cent year-on-year growth in premiums, reaching Rs 3,622 crore,” says Ramachandran, underlining rising consumer demand and wider adoption of health cover. Total premium income is expected to reach Rs 3.21- 3.24 lakh crore, followed by a further growth of 10.9 per cent in FY27. “Despite macroeconomic headwinds and cost pressures, improvements in insurance penetration and density show that the industry remains aligned with the vision of ‘Insurance for All by 2047’,” he notes.
Ramachandran says consumer behaviour also evolved meaningfully in 2025. “Customers increasingly opted for higher sum insured policies, family floaters and value-added benefits such as wellness programmes, OPD cover and maternity,” he says, signalling a clear shift from price-led buying to need-based protection.
Digital transformation, meanwhile, entered a more mature phase. “Over 90 per cent of retail policies are now estimated to be issued digitally, and 60-70 per cent of health claims in urban markets are processed through digital or cashless modes,” Ramachandran says. AI-led claims triaging and fraud detection helped reduce turnaround times and improve operational efficiency. “Technology is increasingly about transparency, trust and customer experience, not just cost efficiencies.”
Distribution continued to be a key focus area, particularly beyond metro markets. “The industry today engages over 30 lakh licensed insurance intermediaries,” says Ramachandran, adding that 2025 saw heightened investments in advisor training, digital enablement and capability building to strengthen last-mile reach.
