Union Finance Minister Nirmala Sitharaman conducted a comprehensive review of the financial performance of public sector general insurance companies (PSGICs) on Wednesday and emphasized the urgent need to harness artificial intelligence (AI) for better risk management and enhanced customer service.
In the meeting, Sitharaman emphasized the importance of digital transformation across all PSGICs to enhance operational efficiency and service delivery. The Finance Ministry, in an official statement, noted that AI-driven systems for claims settlement, especially for Motor Own Damage and Health insurance, could lead to quicker, more accurate claim resolutions.
The Finance Minister also urged insurance companies to innovate by designing products that cater to emerging risks such as cyber fraud and to diversify their offerings in line with evolving consumer needs.
Sitharaman highlighted the need to adopt global best practices in underwriting and portfolio optimization to ensure financial stability. She directed that combined ratios be aligned with international benchmarks to safeguard profitability.
Customer-centricity was also a key theme of the review. Sitharaman instructed the insurers to address customer grievances promptly, enhance social media engagement, and ensure seamless integration with the Account Aggregator system through end-to-end digital KYC processes.
To expand market reach and accessibility, she recommended strategic partnerships with fintechs, insurtech firms, and intermediaries.
Advanced data analytics and AI, she said, must be utilized to develop precise pricing models and efficient claims management systems to improve risk assessment and ensure the long-term sustainability of the sector.
The Finance Minister directed that these reforms be implemented in a time-bound manner, with regular reviews to track progress.
Senior officials from the Department of Financial Services (DFS) and CEOs of PSGICs attended the meeting. Key performance metrics such as premium collections, insurance penetration and density, and incurred claims ratios were reviewed.
According to data presented during the meeting, total premium collections by PSGICs rose from around ₹80,000 crore in 2019 to nearly ₹1.06 lakh crore in 2025. The broader general insurance industry also grew, with FY 2024-25 total premiums reaching ₹3.07 lakh crore.
However, general insurance penetration remains low at 1% of GDP, compared to the global average of 4.2% in 2023. Insurance density, meanwhile, has shown steady improvement.
A five-year analysis of the health insurance sector revealed consistent premium growth across private insurers, standalone health insurers (SAHIs), and PSGICs. Incurred claims ratios, which had peaked during the COVID-19 pandemic in FY21—at 126% for PSGICs and 105% for private insurers—have since moderated to 103%, 89%, and 65% for PSGICs, private insurers, and SAHIs, respectively, by FY24.
The public sector insurers have seen a significant financial turnaround, with all four major firms reporting profits. Oriental Insurance Company Ltd. and National Insurance Company Ltd. returned to profitability in Q4 FY24 and Q2 FY25, respectively, while United India Insurance Company Ltd. posted its first quarterly profit in seven years during Q3 FY25. New India Assurance Company Ltd. has consistently remained profitable and retained its leadership in the sector.
The meeting was also attended by the Managing Directors of General Insurance Corporation of India (Reinsurance) and Agriculture Insurance Company of India Ltd.
