Organisations that are moving towards modular systems and AI-enabled decision tools are seeing faster product development, better pricing accuracy and stronger fraud detection, says a Deloitte India’s report
India’s insurance sector is entering a new phase of transformation as regulatory reforms, digital adoption and the growing use of artificial intelligence reshape how protection reaches individuals and businesses, according to Deloitte India’s “Modernising Indian Insurers” report. .
Over the past decade, the industry has expanded nearly sixfold, growing from Rs 2 lakh crore to Rs 11.9 lakh crore in FY2024–25. Even with this growth, gaps remain.
Insurance access in rural markets is still limited, customer trust continues to be tested by claims and servicing issues, and many insurers are constrained by outdated technology systems.
Technology will play a central role in addressing these challenges. Artificial intelligence, cloud-based platforms and interoperable systems are gradually reshaping how insurers design products, assess risk, manage policies and process claims.
Organisations that are moving towards modular systems and AI-enabled decision tools are seeing faster product development, better pricing accuracy and stronger fraud detection.
Debashish Banerjee, Partner and Insurance Sector Leader, Deloitte South Asia, said: “Digital adoption across India’s insurance sector has grown significantly, but the underlying technology architecture has not kept pace with regulatory ambition, customer expectations and operational complexity. As the industry enters a new phase shaped by regulatory reforms and rising financialisation, insurers will need to modernise legacy systems and adopt modular, interoperable platforms supported by AI-led decision engines. Achieving this will require close collaboration between insurers, regulators and ecosystem partners to build scalable platforms that strengthen agility, improve customer trust and align with initiatives such as Bima Sugam, Bima Vahak and Bima Vistaar.”
At the same time, several structural challenges continue to slow progress. Legacy technology systems delay policy issuance and claims processing, fragmented operational systems limit interoperability across underwriting and servicing functions,and distribution inefficiencies, including high agent attrition and rising acquisition costs which affect long-term sustainability.
Limited rural access and increasing customer grievances related to claims and mis-selling further underline the need for stronger governance and more transparent service delivery.
Addressing these issues requires a shift from fragmented digital upgrades to a more integrated technology foundation.
Deloitte’s Insurance Growth Suite (IGS) proposes a cloud-native ecosystem designed to connect insurers, InsurTechs, intermediaries and public digital infrastructure through open APIs and shared data standards. Such platforms can enable real-time product innovation, personalised engagement and more efficient operations across the insurance ecosystem.
Shankar Sundarrajan, Partner, Customer Strategy & Design, Technology & Transformation, Deloitte South Asia said, “India’s insurance sector is entering a new growth phase driven by rising financialisation, regulatory reforms and rapid digital
adoption. To realise the Vision 2047 ambition of ‘Insurance for All’, insurers will need to move beyond incremental digital upgrades and strengthen technology foundations through AI-led automation, interoperable platforms and robust data governance. Frameworks such as the Insurance Growth Suite can help connect insurers, InsurTechs and digital infrastructure to drive scale, efficiency and inclusion across the ecosystem.”
Looking ahead, insurers are likely to pursue three pathways for modernisation:
-complete core replacement,
-hybrid modernisation,
-progressive core decoupling
For many organisations, progressive core decoupling, offers a balanced route to transformation, allowing them to layer AI-enabled capabilities and modular services over existing systems without disrupting business operations.
With modern enterprise architecture, stronger data governance and alignment with emerging digital infrastructure such as Bima Sugam, Bima Vistaar and Bima Vahak, India’s insurance sector has the potential to evolve into a globally benchmarked protection ecosystem and move closer to achieving the vision of Insurance for All by 2047.