How AI and insurtech could take life insurance to India's villages

Life insurance is an essential part of financial planning. When misfortune strikes, it provides the financial support a family needs to protect its loved ones. Yet across India, this cover remains out of reach for most people.

India is the world's sixth-largest economy and counted among the fastest-growing insurance markets. The Indian insurance market is estimated to reach $222 billion by 2026. Even so, there is a hurdle in the way of this growth. Life insurance penetration was 3 per cent in financial year 2023, fell to 2.8 per cent in 2024 and slipped further to 2.7 per cent in 2025.

These figures are well below the global average of 7 per cent. India's population is very large, and most Indians live without insurance cover. The figures show the present reality: they do not have full insurance protection.

Take the case of villages. According to a report by the Insurance Brokers Association of India (IBAI), about 65 per cent of the country's population lives in rural areas, and fewer than 10 per cent of them have life insurance cover. Two things are clear from these figures. First, making insurance easy and taking financial security to a large section of society remains a big challenge. Second, there is enormous scope for insurance to spread in India.

Old methods of distribution alone will not fill this gap. Different steps must be taken urgently and new options are needed, ones that can remove the barriers of awareness, cost and ease of access to policies.

Insurtech, or insurance technology, is playing an important role here. In areas with low insurance penetration, technology is being used effectively to reach people. New technologies such as algorithms (mathematical rules) and APIs (technology that connects different software) are being used to make insurers' work faster and more accurate. As a result, customers can understand an insurance plan properly, buy it online or with ease, and get post-purchase services in a simple and clear way.

Earlier, buyers had to fill in a proposal form. The form then passed through bank branches to regional offices and through several stages of scrutiny. This carried a considerable risk of human error and took a great deal of time. Now, with AI, or artificial intelligence, this whole complicated process has become simple, quick and seamless. A customer can get cover in less time without a long process.

AI has also made customer service more effective. Consider a life insurer that serves a large number of customers at low premiums. For such companies, the back end, which covers handling data, checking documents and answering customer queries, has to be very fast and accurate.

First, chatbots are available round the clock, so people can clear their doubts at any time. Second, AI can help renew policies more efficiently. Calling customers repeatedly to collect premiums is not always productive. Many customers dislike repeated calls, while some are fine with reminders. Every customer's preference is different, so it is necessary to decide whom to contact and how.

To deal with this, companies use AI analytics to identify precisely the groups of customers who should be called or sent messages. AI voice bots call customers on their own, without human involvement, and complete payments smoothly. Third, AI settles straightforward claims much faster than a human process.

The complex and time-consuming work of underwriting has also become faster, more accurate and safer with AI. When approving a policy, the customer's health records, financial condition and risk must be checked, along with any fraud in the documents. AI can understand such large and complicated data in a few seconds and help the company decide quickly. It studies each customer and builds the right risk profile, which improves the accuracy of risk assessment.

Earlier, it took days or weeks for a policy to be approved and reach the customer. Now this is done in a few hours or minutes. If there is any error in the details of an application or any fraud in the documents, AI can catch it immediately.

Because of AI, mobile apps are no longer just tools for showing information; they have become much smarter. An insurance agent's or customer's app may look simple, but powerful AI technology works behind it. The app checks the customer's background, assesses their risk accurately and can suggest the most suitable policy for their needs. It fills in form details by itself from past data, saving time. It can also sense in advance that a customer may stop paying instalments or that a policy may lapse, and alert the agent.

AI has made it easier to reach and distribute life insurance in villages and small towns. In many rural and semi-urban areas of the country, families have a steady income and basic facilities, but insurers' branches or private financial advisers are often absent.

The real meaning of democratising life insurance is not just reaching more people. It means respecting the feelings and the labour of everyone who works day and night and dreams to secure the family's future. Everyone has a right to this kind of peace of mind. Real progress comes only when everyone gets the chance to feel secure.