Bima Sugam will make insurance inclusive, affordable, transparent: Experts

Leaders called Bima Sugam a tool for transparency, affordability and inclusion

Bima Sugam is an online insurance marketplace that aims to be a single-stop platform for customers to buy, service and settle claims for various policies. It has been called the “UPI moment for insurance”. In a panel discussion at the Business Standard BFSI Insight Summit 2025, Debashish Banerjee, partner at Deloitte India; Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI); Sharad Mathur, managing director and chief executive officer of Universal Sompo General Insurance; and Amit Roy, partner and leader for insurance and allied businesses at PwC India, called Bima Sugam a tool for transparency, affordability and inclusion. Edited excerpts:

 

Will Bima Sugam be a game-changer?

 

Roy: Insurance is about creating trust, more than anything else. People do a lot of research to find the right product but personally I feel it is really about trust: Giving people the opportunity to create something for themselves. I look at Bima Sugam as an answer to that. It will bring transparency, feasibility and customisation.

 

As you have invested in Bima Sugam, can you give your perspective about it?

 

Mathur: Insurance penetration in our country is extremely low. With a population of 1.45 billion, health insurance reaches only about 35–40 per cent of India. Vietnam, which is nowhere near as mature as the United States, has 70–80 per cent of its population insured. One issue is accessibility: Insurance offices and distribution partners cannot easily reach rural or Tier-III or Tier-IV areas. Bima Sugam aims to increase penetration, especially where the representation of insurers is limited. Affordability is another challenge. One positive step by the government is removing the Goods & Services Tax (GST) on life, health, travel and personal accident insurance. Bima Sugam will further help affordability by shifting distribution from commission-based (20–30 per cent) to fee-based, reducing premiums by another 20 per cent. This will make insurance more accessible across the population.

 

How is insurance distribution going to change with Bima Sugam coming in?

 

Bharindwal: We see Bima Sugam as the next step in the digital journey of India’s insurance industry. If it simplifies both purchase and claims for policyholders, it will be beneficial. India already has a huge distribution ecosystem: Brokers, corporate agents, point of salespersons, motor insurance service providers — all created post-privatisation. Nearly 4–4.5 million people are employed directly or indirectly in insurance distribution. Currently, we are unclear about how this will get integrated in the Bima Sugam jigsaw puzzle. Unlike UPI (Unified Payments Interface), which handles transactions, insurance is a push product where customers need advice, especially with more than 500 health insurance policies being available.

 

Intermediaries like brokers and agents will continue to play a critical role. We are waiting for guidance from the government on how it is going to accommodate us (insurance industry).

 

Do you think distributors should be wary of this initiative of the insurance regulator, Irdai?

 

Banerjee: It is the UPI moment and it can be a game-changer if it is done right. The challenge is execution. UPI has replaced global payment networks. But here, we already have an existing ecosystem: Brokers, agents, aggregators. What exactly are we trying to change? Business models will need thoughtful redesign. If the goal is insurance for all by 2047, then the phased rollout should be based on geography, not by line of business — start with underpenetrated rural areas. That avoids disrupting existing distribution too quickly and gives time for adaptation. If this becomes a government initiative funded by industry, India could redefine penetration — maybe by the number of people insured rather than the premium-to-GDP ratio. With Aadhaar and citizen data, this is very possible.

 

Will the aggregator business model be under threat?

 

Roy: Looking at the future, yes, things will change. Insurance is a complex, technical product and there is a need for intermediation for transparency. Bima Sugam can support distributors by improving credibility through transparent, unbiased information. This is an industry-wide initiative, which gives it high credibility from day one. The challenge is simplification. Bima Sugam aims to create something that is simple, affordable and transparent. 

 

The idea came up in 2022. When will it be operational?

 

Mathur: It is in an advanced stage. A board has been formed, including regulatory members, industry experts and management teams comprising tech, finance and risk leaders. ISO guidelines [internationally agreed-upon frameworks for best practices in various areas] alignment is ongoing due to data privacy concerns. This is not just another digital marketplace — it’s a transformation, so it takes time. The Bima Sugam website was launched recently at the Irdai office. We hope for a phased rollout early next fiscal year. Bima Sugam will not threaten web aggregators — they will continue with their own models. Bima Sugam targets the population currently excluded from insurance. It will not be a threat to web aggregators. They have their own marketplace. Here the idea is to have inclusion of the population that is left out. Besides getting access, these customers will be able to compare, buy, maintain, and claim — all at one place.

 

Can it move insurance to be fee-based, not commission-based? Will distributors be comfortable with that?

 

Bharindwal: The industry has created a huge distribution infrastructure supported by insurers. Intermediaries take risk and bear capital costs; hence variable pay is essential. The regulator has moved from a commission-cap structure to EoM (expenses of management), leaving pricing to the marketplace. Penetration is low, and we must reach uninsured populations. Technology costs money — Bima Sugam’s capital requirement grew from ₹50 crore to ₹400 crore. Distribution costs must be understood in this context.  

 

Why don’t we see public-sector insurers involved in Bima Sugam? 

 

Banerjee: There have been discussions about conflict of interest. PSUs did show interest but for some reason it is stuck. Transformation takes time — business models will definitely change.

 

Global interest in India is high as we move towards becoming the third largest economy. Improving insurance penetration is essential, and Bima Sugam will play a role, though its final shape is still evolving.