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The Union Finance Minister Nirmala Sitharaman has asked PSU general insurers to leverage AI to expedite claim settlement process in motor and health insurance policies.
The Minister emphasised the urgent need for digital transformation across all public sector general insurers 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, said Sitharaman.
Further, Sitharaman also emphasised the importance of leveraging advanced data analytics and AI to develop precise pricing models and efficient claims modelling, which are essential for improved risk assessment and long-term sustainability.
Sitharaman also 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.
Sitharaman chaired a review meeting of Public Sector General Insurance Companies (PSGICs) in New Delhi. The meeting was attended by Secretary, Department of Financial Services (DFS), M. Nagaraju, and the Managing Directors of PSGICs—New India Assurance, United India Insurance, Oriental Insurance, and National Insurance, General Insurance Corporation of India (Reinsurance), Agriculture Insurance Company of India Limited, along with other senior officials of the Ministry of Finance.
While general insurance penetration in India remains relatively low at 1% of GDP — compared to a global average of 4.2% in 2023 — insurance density has steadily improved, increasing from $9 in 2019 to $25 in 2023. The FM underscored the need for PSGICs to work towards improving both penetration and density to ensure wider financial protection.
Officials also presented a five-year analysis of the health insurance segment, showing consistent premium growth across private insurers, standalone health insurers (SAHI), and PSGICs. Incurred claims ratios, which had peaked during the COVID-19 pandemic in FY21 (PSGICs at 126% and private insurers at 105%), have since declined. By FY24, these ratios had moderated to 103% for PSGICs, 89% for private insurers, and 65% for SAHI.