Finance Minister Nirmala Sitharaman has urged public sector general insurance companies to create innovative insurance products that address emerging risks like cyber fraud and align with consumer demands.
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VELANKANNI RAJ B
Finance Minister Nirmala Sitharaman on Wednesday directed public sector general insurance companies (PSGIC) to develop innovative insurance products tailored to new and emerging risks.
Public sector general insurance companies include New India Assurance, United India Insurance, Oriental Insurance, and National Insurance, General Insurance Corporation of India (Reinsurance), and Agriculture Insurance Company of India Limited.
The Minister “directed the companies to develop innovative insurance products tailored to new and emerging risks, including cyber fraud, and to diversify their product portfolio in line with evolving consumer needs. The importance of robust underwriting practices and portfolio optimisation was also highlighted, with instructions to align combined ratios with global industry benchmarks to safeguard profitability and financial stability,” a statement issued by the Finance Ministry after the meeting said.
The meeting noted that the total premium collected by PSGICs rose to ₹1.06 lakh crore at the end of fiscal year 2024-25 from around ₹80,000 crore in 2018-19. The general insurance industry also reported growth, with total premium collections reaching over ₹3 lakh crore in FY25. It was also highlighted that while general insurance penetration in India remains relatively low at 1 per cent of GDP compared to a global average of 4.2 per cent in 2023, insurance density has still risen to $25 in 2023 from $9 in 2019 to $25 in 2023. “The Minister underscored the need for PSGICs to work towards improving both penetration and density to ensure wider financial protection,” the statement said.
It was mentioned that the incurred claims ratio for PSGIC dipped to 103 per cent in FY24 from a peak of 126 per cent during the pandemic. For private insurance, it has come down to 89 per cent from 105 per cent.
The PSGICs have witnessed a significant turnaround with all of them having become profitable again. While Oriental Insurance Company Ltd. (OICL) and National Insurance Company Ltd. (NICL) started posting quarterly profits from Q4 of FY24 and Q2 of FY25, respectively, United India Insurance Company Ltd. (UIICL) posted profit in Q3 of FY25 after a gap of 7 years. Notably, New India Assurance Company Ltd. (NIACL) has consistently maintained its position as a market leader and has been making regular profits.
“The Minister emphasised the urgent need for digital transformation across all PSGICs to improve service delivery and efficiency. This includes the adoption of AI-driven claim settlement systems, particularly for Motor Own Damage and Health insurance products, to ensure faster and more accurate claim resolution,” the statement said.
SItharaman directed PSGICs to promptly address customer grievances, strengthen social media engagement, and ensure seamless integration with the Account Aggregator system, including end-to-end digital Know Your Customer (KYC) processes. These measures are designed to simplify onboarding and improve the customer experience. To expand market reach and strengthen service accessibility, PSGICs were encouraged to pursue strategic collaborations with intermediaries, fintechs, and insurtech firms. These partnerships are expected to reinforce the nationwide presence of PSGICs and deepen insurance penetration across demographics, the statement said.
Published on May 29, 2025
