Finance Minister Nirmala Sitharaman recently met with public sector general insurance companies to discuss their performance and future strategies. The meeting, attended by Financial Services Secretary M Nagaraju, aimed to address the need for innovation and diversification in the insurance sector. Sitharaman emphasized the importance of developing new products to mitigate emerging risks such as cyber fraud, which is becoming increasingly prevalent.
The Minister highlighted the need for robust underwriting, portfolio optimization, and aligning combined ratios with global benchmarks to ensure long-term financial sustainability. She encouraged insurers to leverage data analytics and artificial intelligence (AI) to develop precise pricing and claims models, enabling improved risk assessment. This will help insurers to better manage their risks and provide more accurate quotes to policyholders.
Sitharaman also stressed the need to increase insurance penetration and density in India. Currently, insurance penetration in India stands at 1% of GDP, significantly lower than the global average of 4.2%. However, there has been some improvement in insurance density, which has increased from $9 in 2019 to $25 in 2023. The Minister urged insurers to step up their adoption of digital tools to improve their reach and services.
The public sector general insurance companies, including New India Assurance, United India Insurance, and Oriental Insurance, among others, were asked to diversify their portfolios to meet evolving consumer demands. By developing innovative products and leveraging technology, these insurers can better serve their customers and stay competitive in the market. Overall, the meeting aimed to encourage public sector insurers to modernize and expand their services, ultimately contributing to the growth of the Indian insurance sector. By doing so, the government hopes to increase insurance coverage and provide greater financial protection to citizens.