FM Sitharaman Reviews PSGICs, Calls for AI-Driven Reforms & Innovation

Finance Minister Sitharaman was briefed on the notable growth trajectory of the PSGICs.

In a high-level review meeting convened in New Delhi, Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, undertook a comprehensive performance evaluation of Public Sector General Insurance Companies (PSGICs). The meeting, held on May 28, 2025, brought together top officials from the Ministry of Finance, including Shri M. Nagaraju, Secretary, Department of Financial Services (DFS), and Managing Directors of the PSGICs—New India Assurance, United India Insurance, Oriental Insurance, National Insurance, General Insurance Corporation of India (GIC Re), and Agriculture Insurance Company of India Ltd (AICIL).

The meeting's core agenda was to assess performance indicators, enhance customer centricity, and formulate strategic directives to bolster India's general insurance sector amid evolving risk scenarios.

Key Sectoral Highlights and Growth Trends

Finance Minister Sitharaman was briefed on the notable growth trajectory of the PSGICs. Total premiums collected by these public insurers rose from ₹80,000 crore in 2019 to ₹1.06 lakh crore in 2025, signifying renewed financial stability and sector resilience. Parallelly, the overall general insurance industry posted a record ₹3.07 lakh crore in premium collections for FY 2024–25, underscoring robust sectoral momentum.

However, it was noted that insurance penetration in India still lags behind global standards, currently standing at just 1% of GDP, compared to the global average of 4.2%. Insurance density, however, showed a promising increase—from $9 in 2019 to $25 in 2023.

Smt. Sitharaman emphasized the need to expand both penetration and density, noting that affordable and accessible insurance is central to financial inclusion and resilience for individuals and enterprises alike.

Health Insurance: A Sector in Recovery

A detailed five-year sectoral analysis of the health insurance segment revealed a consistent growth pattern across Private Insurers, Standalone Health Insurers (SAHI), and PSGICs. While incurred claims ratios (ICRs) had peaked during the COVID-19 pandemic in FY 2020–21—with PSGICs reporting 126% ICR and private insurers 105%, these have since stabilized:

• FY 2023–24 ICRs:

  • PSGICs: 103%

  • Private Insurers: 89%

  • SAHI: 65%

These numbers reflect improved risk management, underwriting discipline, and operational recovery post-pandemic.

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Financial Turnaround and Market Leadership

In a significant development, all PSGICs have returned to profitability. The Oriental Insurance Company Ltd. (OICL) and National Insurance Company Ltd. (NICL) began posting quarterly profits in Q4 FY 2023–24 and Q2 FY 2024–25, respectively. United India Insurance Company Ltd. (UIICL) registered its first quarterly profit in Q3 FY 2024–25 after a 7-year gap.

Meanwhile, New India Assurance Company Ltd. (NIACL) retained its position as market leader and continues to report consistent profitability, a testament to its robust operational practices and diversified product portfolio.

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Digital Transformation and Innovation Mandate

The Finance Minister issued a strong directive for digital transformation across all PSGICs. Key action points include:

• AI-driven claims settlement systems for Motor Own Damage and Health products

• Full digitization of customer onboarding, including e-KYC through the Account Aggregator ecosystem

• Real-time data integration and analytics for better pricing models, claims modelling, and fraud detection

These steps aim to enhance efficiency, reduce turnaround times, and boost customer satisfaction.

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Strengthening the Product Portfolio

Recognizing the emerging risk landscape, Smt. Sitharaman instructed PSGICs to:

• Design innovative insurance products to address new-age risks such as cyber threats, digital fraud, and climate-related disruptions

• Ensure product diversification aligned with changing consumer needs

• Strengthen underwriting frameworks to reduce combined ratios in line with international industry standards

She reiterated that robust underwriting is key to maintaining long-term profitability and solvency.

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Customer-Centric Focus and Engagement

Placing customers at the center of the reform roadmap, the Finance Minister emphasized:

• Faster grievance redressal mechanisms

• Improved social media responsiveness

• Expansion of multi-channel service delivery models

• Transparent and simplified claim and renewal processes

These measures aim to rebuild trust, enhance accessibility, and drive loyalty in an increasingly competitive insurance market.

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Expanding Market Access Through Partnerships

To improve market penetration and distribution, PSGICs have been encouraged to forge strategic collaborations with:

• Fintech and Insurtech startups

• Digital platforms and e-commerce aggregators

• Intermediaries and local agents

These partnerships are expected to expand outreach, especially in semi-urban and rural areas, thereby closing the insurance access gap.

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Leveraging Technology for Resilience and Growth

Smt. Sitharaman emphasized the integration of advanced technologies like data analytics, AI, and machine learning to achieve:

• Dynamic risk profiling and pricing

• Efficient portfolio optimization

• Scalable and customizable policy offerings

• Enhanced fraud detection and claim validation

She concluded by stating that these digital reforms would be instrumental in reshaping the insurance landscape, making public sector insurers more competitive, agile, and responsive.

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Time-Bound Implementation and Review

All PSGICs have been instructed to implement the recommended measures in a time-bound manner. The Ministry will conduct regular progress reviews to ensure compliance, evaluate impact, and provide policy guidance.

With these reforms, the government is laying a foundation for a more inclusive, efficient, and customer-focused insurance sector, aiming to align with global best practices while addressing the unique needs of the Indian demographic.