Insurtech In India: An Overview

Introduction

Various reports have indicated the exponential growth of India’s insurance sector which has expanded at a compounded annual growth rate of about 17% over the past two decades¹. Notably, in the last financial year, the industry recorded total premium income of c.USD 82.49 billion² and is expected to grow at a rate of around 7.1%, well above market averages, for over next 5 years³. This rapid expansion has underscored the importance of “Insurtech”, or the integration of technology across the insurance value chain, in efficiently serving a growing and increasingly diverse market. Accordingly, Insurers are steadily moving toward deeper integration of technology in their processes. The India Insurtech market reached USD 0.90 billion in 2024 and is projected to grow to USD 11.90 billion by 2033, exhibiting a compound annual growth rate of 29.1% during 2025–2033. Insurtech has therefore become a central focus for both the Indian insurance regulator (the IRDAI) as well as the insurance industry.

The IRDAI has, over the years, actively encouraged the adoption of technology across the sector with the broader objective of increasing insurance penetration in the country. Likewise, the insurance industry is increasingly embracing technology to expand its market share and tap into underserved/untapped segments.

This article discusses insurtech developments so far and what may be expected next as the Indian insurance sector moves from initial digitisation and sandbox-based experimentation towards deeper structural integration of technology across insurance operations.

Regulatory Approach

The development of insurtech in India has not been driven by a single regulatory circular or guideline, but by a gradual shift in the IRDAI’s approach to technology adoption across the insurance sector. In broad terms, the first phase was one of digital enablement, where the focus was on building foundational infrastructure and allowing basic online distribution and servicing. This was followed by a phase of controlled experimentation, where the regulatory sandbox framework enabled testing of new products and technology-led models. Thereafter, the focus moved towards digitising operations and the development of common digital infrastructure for the sector. The next phase, which is now beginning to emerge more clearly, is likely to centre on interoperability, AI-led decision-making, data governance, cybersecurity, and principle-based regulatory oversight.

Phase I: Foundational Framework for Digital Enablement (2011–2017)

During its initial approach, the IRDAI largely acted as an enabler. At this stage, technology was being introduced primarily to facilitate access, efficiency, and standardisation, rather than to reshape insurance products or underwriting models themselves.

The IRDAI first laid down the digital base for the sector by introducing the concept of Insurance Repositories in 2011 which enabled policyholders to open e-insurance accounts and store their insurance policies electronically⁴. This was followed by the IRDAI, in 2016, requiring Insurers to issue certain insurance policies in electronic form⁵. Notably, during this period, the IRDAI laid the foundation for digital distribution by introducing Insurance Web Aggregators in 2013, a new form of intermediary that maintains websites for providing product information, price comparisons, and related services across Insurers. At this stage, the IRDAI mainly focused on creating a foundational digital infrastructure for the sector, and the use of technology by insurance sector, specifically Insurers, was largely limited to meeting regulatory requirements rather than driving wider innovation.

Thereafter, building on this, the IRDAI in 2017, enabled all Insurers and intermediaries to set up websites and/or mobile applications for selling and servicing insurance policies online, similar to e-commerce platforms⁶. In this context, the IRDAI issued comprehensive guidelines on information and cybersecurity for the safe adoption of technology⁷. These developments coincided with the emergence of digital-first Insurers, with the IRDAI granting licences to entities such as Acko and Digit, reflecting a gradual shift from traditional insurance models towards technology being embedded within insurance operations themselves.

Phase II: Facilitating Innovation through the Regulatory Sandbox

Having first established this digital base, the IRDAI’s approach then shifted from enabler to controlled gatekeeper. Rather than allowing unrestricted experimentation, the IRDAI chose to create a controlled environment for Insurers and intermediaries to test products that may not fully comply with the existing framework. This marked an important shift, because technology was no longer being used merely to digitise the existing processes, but to test new ways of underwriting, distributing, and servicing insurance.

The IRDAI introduced the regulatory sandbox framework in 2019⁸, for the safe testing of new innovative solutions that were gradually introduced into the market. The IRDAI had first released a discussion paper on telematics in early 2017⁹, followed by the constitution of a working committee later that year to study the broader insurtech landscape¹⁰. The committee, inter alia, recommended the need to test wearable/portable devices insurance products within the sandbox environment. This was soon reflected in multiple sandbox applications, particularly for motor insurance segments¹¹, where proposed motor insurance products used telematics devices to price premiums based on driving behaviour, distance driven, time of day, braking patterns, acceleration etc. These developments ultimately paved the way for the IRDAI’s decision in July 2022 to formally permit usage-based insurance products (both Pay-As-You-Drive and Pay-How-You-Drive), as add-ons to the Own Damage motor insurance policies¹².

Similarly, sandbox applications were dominated by wearable-linked health insurance offerings, where devices were used to track wellness and manage chronic conditions enabling Insurers to provide personalised premiums and rewards for healthy behaviour. Under this framework, the industry tested and received IRDAI approval for a wide range of innovations, such as, women-led door-to-door distribution models, premium-financing models, digital wallets for insurance premiums, and various simplified/parametric insurance products. The sandbox framework was subsequently expanded to allow testing of hybrid products and services falling within the ambit of one or more financial sector regulators¹³, which assumed added relevance in light of the proposed reforms to the Insurance Act 1938 at that time proposing to permit Insurers to undertake certain non-insurance business activities as well¹⁴.

Phase III: Digitisation of Operations and Insurance Systems

The IRDAI’s approach moved towards establishing a standardised digital infrastructure for the insurance sector. The focus during this phase was not merely on permitting innovation, but on embedding digital processes within existing insurance operations by enabling remote on-boarding, consent-based data sharing, common digital infrastructure, and broader digital servicing requirements across the sector.

For instance, in 2020, the IRDAI introduced Video-Based Identification Process for onboarding and KYC process¹⁵ as well as dispensed the requirement for Life Insurers to obtain wet signature on the proposal form, enabling a full digital onboarding process¹⁶. This remote onboarding framework has also assumed significance for entities operating in the International Financial Services Centre (“GIFT City”), where the IFSCA has permitted video-based identification process to facilitate global customer acquisition, including for onboarding Non-Resident Indian (“NRI”) customers in specified jurisdictions¹⁷.

Similarly, the IRDAI, through its circulars of 2022 and 2023¹⁸, allowed Insurers and Insurance Repositories, to participate in the RBI’s Account Aggregator framework enabling them to securely access and share customer financial data, such as bank balances, insurance policies, and investments, with explicit consent, for faster onboarding, personalised products, and data-driven insurance solutions.

In addition, the IRDAI, acknowledging the fast growing use of drones in the insurance sector (including for crop surveys and related applications), constituted a working group in early 2020 to examine insurance coverage for drones¹⁹, and the working group issued its recommendations later that year²⁰. The working group’s recommendations reflected a broader regulatory recognition that new technology would not only transform insurance operations, but also create demand for new and specialised insurance products and underwriting models. This assumes practical significance in light of the Director General of Civil Aviation (DGCA) mandate²¹ that all drones maintain valid third-party insurance. Since then, the IRDAI has also formalised the above recommendations and encouraged General Insurers to design and offer specialised drone insurance products, and prescribed a standardised product structure containing third-party liability cover²².

Alongside these efforts to enable technology adoption, the IRDAI continued strengthening its information security and cybersecurity framework. What initially began in 2017 as a framework applicable to Insurers was subsequently extended to insurance intermediaries, and later comprehensively revised by way of the IRDAI’s Information and Cyber Security Guidelines 2023, and mandate comprehensive protocols to safeguard data confidentiality and ensure continuous system integrity.

Most recently, as part of its regulatory overhaul in 2024, the IRDAI reinforced the importance of technology adoption by mandating electronic issuance of all insurance policies and encouraging end-to-end digital systems for policy issuance, servicing, and grievance redressal²³. Further, the IRDAI has introduced norms for setting up an insurance electronic marketplace known as “Bima Sugam”, intended to serve as a unified digital platform facilitating, inter alia, the purchase, sale, and servicing of insurance policies, settlement of insurance claims, grievance redressal, and other related insurance services involving Insurers, insurance agents/intermediaries, consumers, and other permitted participants. The Bima Sugam platform is intended to function as the digital infrastructure for the broader “Bima Trinity” initiative, which also includes “Bima Vahak”, a women-centric distribution force using handheld digital devices to facilitate policy issuance and claims servicing directly through the Bima Sugam platform, combining both the intended last-mile distribution and the centralized digital marketplace.

Notably, this marked a shift by the IRDAI from merely enabling digital adoption to actively mandating it. In addition, the IRDAI allows Insurers to incur additional expenditure over and above the regulatory limit on expenses of management, specifically towards insurtech initiatives²⁴. By this stage, the regulatory role has moved well beyond that of an enabler and towards establishing a uniform digital framework.

Phase IV: What’s Next?

In this emerging phase, the regulatory focus is expected to shift towards the supervision of AI-led decision-making, interoperability across financial sector frameworks, data governance, cybersecurity, explainability, and accountability. In that sense, the IRDAI is likely to increasingly assume the role of a technology governor rather than merely an enabler of digitisation.

The Indian insurance sector, driven by the IRDAI’s continued push for digitisation and digitalisation, is expected to move from front-end technology upgrades to deeper structural and process transformation. As most Insurers and intermediaries have already built, or are in the process of building, end-to-end digital infrastructure across the insurance value chain, usage-based and behaviour-based insurance models are also expected to increasingly move from pilot or niche offerings into more mainstream products, thereby fundamentally reshaping how risks are priced, monitored, and managed.

In this next phase, the focus is expected to shift from the mere digitisation of existing workflows towards addressing core business and regulatory challenges through emerging technologies such as artificial intelligence (“AI”). With the rapid advancement of AI, aspects such as underwriting, claims processing, fraud detection, customer servicing, and grievance management are all likely to witness full-scale AI integration across decision-making verticals, evolving from being a part of initial regulatory sandbox experiments to compliant market offerings. While such adoption is being actively explored across the industry, it is also likely to give rise to significant regulatory and governance concerns. Both the insurance industry and the IRDAI have expressed concerns around bias, opacity, accountability, and explainability in AI-driven decision-making, particularly where models are trained on historical datasets that may perpetuate or amplify discriminatory outcomes.

The evolving jurisprudence on data security and cybersecurity is set to influence how Insurers deploy AI and other emerging technologies. For Insurtech models reliant on collecting granular personal data, including telematics, health, behavioural, or financial data, compliance with the statutory Digital Personal Data Protection Act 2023 (“DPDP Act”) will also be critical. The DPDP Act introduces specific obligations for data fiduciaries, including the role of Consent Managers and the necessity for data flow mapping, and there are substantial penalties for non-compliance. Equally, the IRDAI has already demonstrated through its cybersecurity framework and enforcement actions that technology adoption cannot come at the expense of data governance, confidentiality, cyber resilience, and accountability. The regulatory emphasis, therefore, is likely to be not only on enabling innovation, but on ensuring that new technology-led business models remain secure, auditable and capable of regulatory supervision. In this context, the IRDAI’s order of 25 July 2025 imposing a monetary penalty of Rs. 3.39 crores on an Insurer²⁵ for deficiencies in data safeguarding and cybersecurity controls serves as a clear enforcement signal to the industry.

Having said that, these digital upgrades are also expected to help Insurers tap previously underserved or underwritten segments, such as cyber risk, climate-driven losses, ageing populations, and chronic illness, where protection gaps have historically been large due to either lack of data, underwriting appetite, or overall complexity. The sector in 2026 appears to be moving beyond digitisation as a matter of convenience, and towards technology becoming a structural feature of how insurance products are designed, distributed, underwritten, serviced, and regulated.

Footnotes

1. Please see: https://www.ibef.org/industry/insurance-presentation.

2. Ibid.

3. Please see: https://www.swissre.com/institute/research/topics-and-risk-dialogues/economy-and-insurance-outlook/india-insurance-market-growing-fast-build-resilience.html.

4. The IRDAI’s guidelines on “Insurance Repositories and Electronic Issuance of Insurance Policies” of 29 April 2011 as, updated on 29 May 2015.

5. IRDAI (Issuance of e-Insurance Policies) Regulations 2016.

6. The IRDAI’s Guidelines on Insurance E-commerce of 9 March 2017.

7. The IRDAI’s Guidelines on Information and Cybersecurity for Insurers of 7 April 2017.

8. The IRDAI (Regulatory Sandbox) Regulations 2019; and now see the IRDAI (Regulatory Sandbox) Regulations 2025, notified on 1 January 2025.

9. The IRDAI’s Discussion Paper on Telematics and Motor Insurance of 3 August 2017.

10. The IRDAI’s order on “Constitution of a Working Group to examine ‘Innovations in insurance” of 7 December 2017.

11. IBEF, Opportunity for Fintech in the Indian Insurance Industry, accessible at https://www.ibef.org/blogs/opportunity-for-fintech-in-the-indian-insurance-industry

12. IRDAI’s circular on “Introduction of new add-ons in Motor Insurance” of 5 July 2022.

13. The IRDAI’s circular on “Inter-operable Regulatory Sandbox: Standard Operating Procedure” of 12 October 2022.

14. Please note that while (i) the 2022 draft Bill proposed allowing Insurers to distribute “financial products” which may have potentially included products such as mutual funds and loans, and (ii) the subsequent 2024 draft Bill revised this to permit listed ancillary activities (and such other business as may be notified by the Central Government), the 2025 version, as finally enacted, does not permit any such non-insurance business.

15. IRDAI’s circular on “Video Based Identification Process (VBIP)” of 18 September 2020.

16. IRDAI’s circular on “Dispensing with physical signatures on proposal forms” of 11 November 2020.

17" target="_blank" name="_ftn17">17. The IFSCA, through its circular of 31 October 2025, introduced the Video-based Customer Identification Process, as part of its AML/CFT/KYC framework, for NRI customers residing in the USA, Japan, South Korea, the UK, Canada, the UAE, Singapore, Australia, and the EU (excluding Croatia).

18. IRDAI’s circular on “Participation in Account Aggregator Framework” of 14 November 2022, and circular on “Participation in Account Aggregator (AA) Framework as Financial Information User” of 3 November 2023.

19. IRDAI’s order on Working Group for insurance of Remotely Piloted Aircraft System (RAPS)/Drone Technology of 24 June 2020.

20. IRDAI’s Report of Committee on Remotely Piloted Aircraft System (RPAs) / Drone Technology of 12 August 2020.

21. The Ministry of Civil Aviation notified the Draft Unmanned Aircraft Systems Rules 2020 which were subsequently formalised as the Unmanned Aircraft Systems Rules 2021.

22. IRDAI’s circular on “Product Structure for Insurance of Remotely Piloted Aircraft System (RPAS)/Drones” of 11 February 2021.

23. The IRDAI (Protection of Policyholders’ Interest, Operations and Allied Matters of Insurers) Regulations 2024 along with the IRDAI’s “Master Circular on Operations and Allied Matters of Insurers” of 19 June 2024 and IRDAI’s “Master Circular on Protection of Policyholder’s Interests” of 5 September 2024.

24. The IRDAI (EOM including Commission) Regulations 2024.

25. IRDAI Press Release dated 25 July 2025 in relation to the order passed in the matter of M/s Star Health and Allied Insurance Co Ltd.

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