By Ish Babbar, Co-Founder and CTO, InsuranceDekho
For millions of Indians, the first barrier to insurance is not product availability. It is understanding what a policy covers, completing a purchase with limited connectivity and knowing where to turn when a claim arises. Technology’s most important role is not to place a digital layer over an old process, but to simplify the process itself.
That role has become more consequential since India raised the foreign direct investment limit in insurance companies to 100%. The Ministry of Finance said in December 2025 that the reform is expected to support capital augmentation, advanced technology and global best practices. Fresh capital can help insurers modernise systems, strengthen digital distribution and invest in data and AI. The test is whether this investment makes insurance easier to discover, understand, and use for households outside the formal system.
Capital must improve the economics of access
The opportunity is large, but so is the unfinished work. The Economic Survey 2025–26 notes that insurance density, which measures insurance premium per capita, rose to USD 97 in FY25, while insurance penetration declined to 3.7%. Spending has risen among already insured households without coverage widening at the same pace.
This distinction should guide the industry’s technology investments. If fresh capital is used to compete more aggressively for the same digitally comfortable customers, competition may rise without meaningfully broadening the market. Penetration improves when the cost of reaching and serving a new household falls, and when that household can find protection suited to its circumstances.
There is considerable scope to improve the machinery behind the customer experience. Cloud-based infrastructure can help platforms handle growth without equivalent physical expansion. APIs can allow insurers and intermediaries to exchange information efficiently, while automated workflows can reduce repeated data entry and processing delays.
Lower operating friction also shapes who can be served sustainably. It makes smaller-ticket policies viable and extends reach to locations where a branch-heavy model is difficult to maintain. Technology, then, is not separate from affordability; it is one of the ways affordability can be achieved.
Build for the customer India actually has
An insurance journey designed around stable broadband, English-language forms and high financial literacy will not travel intact across India. Interfaces must be lightweight, mobile-first and available in familiar languages. Questions should use terms customers recognise, documents should be easy to capture, and progress should not be lost when someone moves from self-service to assisted support.
Technology can also prepare customers for a better sales conversation. Short vernacular explainers, voice-led assistance and prompts based on real-life situations can make policy terms less abstract. The purpose is not to hurry a customer towards checkout, but to help them understand the purchase and ask the right questions.
Data can make this experience more relevant. With clear consent and appropriate safeguards, information about a customer’s life stage, family responsibilities, location and stated needs can reduce an overwhelming range of products to a manageable set of options. Automation can identify missing disclosures or documentation gaps before they cause delays. It can also make renewals more dependable through reminders shaped around the customer’s policy and circumstances.
Technology’s responsibility does not end once a premium is paid. Guided document submission, real-time claim updates and clearly visible escalation routes can reduce uncertainty when a customer may already be under stress. Trust is earned when the system remains useful during the difficult parts of insurance as well.
Give the agent better tools, not a smaller role
Insurance distribution is sometimes framed as a choice between digital platforms and human intermediaries. Across Tier II and Tier III markets, that is a false choice. For many customers, an agent or adviser remains the bridge between accessing a product and genuinely understanding it. Technology should make that bridge stronger.
AI-enabled comparison and recommendation tools can help agents examine product features, waiting periods, exclusions and suitability more consistently. Analytics can identify customers who may be inadequately insured, while automated servicing reduces routine follow-ups. This leaves more time for work requiring judgement and empathy: understanding hesitation, explaining trade-offs and taking responsibility when assistance is needed.
Such systems must be deployed with discipline. Recommendations should be explainable, personal information must be protected and consequential decisions should remain subject to human oversight. A model that improves conversion while weakening suitability will ultimately damage both trust and penetration.
India’s insurance opening can bring additional capital, new participants and stronger technical capabilities into the market. Whether it widens the market will depend on how those resources are used. The most valuable technology may not be the most visible. Customers will experience its value through simpler explanations, fewer repeated steps, quicker resolutions and better-equipped local advisers.
Capital can open the door, but technology working alongside people will determine how many more households are able to walk through it.