Union Finance Minister Nirmala Sitharaman on Wednesday instructed insurance companies to create innovative products that address new and emerging risks, such as cyber fraud, and to diversify their portfolios to meet changing consumer demands. A finance ministry statement highlighted the need for strong underwriting practices and portfolio optimization, with a focus on aligning combined ratios with global industry standards to maintain profitability and financial stability.

Sitharaman led a review meeting of public sector general insurance companies (PSGICs) in New Delhi. The meeting included officials like Secretary of the Department of Financial Services, M. Nagaraju, managing directors of major insurance firms, and other senior finance ministry officials. She directed PSGICs to quickly resolve customer complaints, enhance social media engagement, and integrate smoothly with the Account Aggregator system, including fully digital Know Your Customer (KYC) processes.

To expand their reach and improve service access, PSGICs were encouraged to form strategic partnerships with intermediaries, fintech, and insurtech companies. These collaborations aim to increase the presence of PSGICs across the country and boost insurance penetration among diverse groups. The Finance Minister also emphasized using advanced data analytics and artificial intelligence to develop accurate pricing models and efficient claims management, which are crucial for better risk assessment and sustainable growth.

PSGICs were ordered to implement these measures within set timelines, with regular progress reviews to ensure goals are met. During the meeting, Sitharaman reviewed key metrics such as premium collections, insurance penetration, density, and claims ratios. Premium collections by PSGICs have grown significantly from about ₹80,000 crore in 2019 to nearly ₹1.06 trillion in 2025. The overall general insurance sector also saw growth, with total premiums reaching ₹3.07 trillion in FY25.

Although insurance penetration in India remains low at 1% of GDP—compared to a global average of 4.2% in 2023—insurance density has improved steadily, rising from $19 in 2019 to $25 in 2023. The Finance Minister stressed the importance of increasing both penetration and density to provide wider financial protection. She also highlighted the urgent need for digital transformation across PSGICs to improve service and efficiency. This includes adopting AI-driven claim settlement systems, especially for motor own damage and health insurance, to enable faster and more accurate claim processing.