To be inclusive, insurance will need a mix of tech and human touch

India's economy is a map of diversity where digital adoption in urban areas coexists with the challenge of financial literacy in rural pockets. For a country this huge and diverse, financial inclusion is both a challenge and an opportunity. Unlike digital banking, insurance isn’t a simple transactional service. It requires understanding, reassurance and often a nudge. Despite high internet reach, insurance penetration is at 4 per cent of the gross domestic product — far below developed markets. And so, a one-dimensional distribution model cannot solve the complexity of insurance distribution.

 

The answer lies in adopting an approach that blends digital efficiency with on-ground human touch — an omnichannel distribution approach. While digital channels drive accessibility and cost efficiency, physical touch points build confidence and cater to the underinsured segments.

 

In FY24, India's life insurance sector showed a strong growth in total premium income of 6.1 per cent, with private insurers seeing a 15.1 per cent rise. The non-life sector saw a premium income increase of 12.8 per cent, with health premiums growing 20 per cent and motor 12 per cent. To sustain the momentum, it is important to tailor the distribution strategy to the country’s vast and diverse economic and demographic spectrum.

 

Digitisation has helped bring millions under financial inclusion. However, this is often limited to having a bank account or credit transactions. Compared to other financial services, familiarity and engagement with insurance often lags. Rural and semi-urban consumers, despite their familiarity with mobile banking, require support in navigating insurance options. India is home to around 400 million middle-class consumers, but only about 40 million or 10 per cent have a retail health insurance plan.

 

Insurance in rural areas is still, at its core, a promise. Even those willing to buy insurance, struggle to navigate multiple options and seek the comfort of speaking to someone personally. For online customers, a physical touch point provides reassurance for service and support. In moments of uncertainty, the ability to walk into an office or speak face-to-face with an advisor reinforces trust.

 

A health emergency or untimely demise of an earning member stands to push families into poverty. This is what makes pure protection products like health and term insurance critical. The industry recognises this and continues to bring innovative solutions like independent term plans for homemakers or maternity plans with short waiting periods. This ensures there’s a product for consumers in all geographies. But the distribution strategy plays an equally important role for products to reach the masses. Digital channels should be complemented with physical last-mile distribution through on-ground support, assisted buying models and integrating with the local ecosystem.

 

The regulatory push for seamless distribution enables this model. The government allowing 100 per cent foreign direct investment in insurance has also supported omnichannel expansion by bringing in global capital to scale up distribution networks, enhance digital infrastructure and strengthen on-ground advisory services. For low-income segments, innovative distribution models are also emerging. Affordable health plans and UPI-led premium payments are driving adoption among first-time insurance buyers.

 

The insurance industry has long struggled with a trust deficit. For a vast and varied country like India, trust cannot be built solely through one approach. While digital platforms offer speed and convenience, face-to-face interactions bring better clarity and comfort. Beyond purchase, physical touch points like service centres and claim-assistance desks add a layer of accountability.  

 

In a sector where scepticism is high, the combination of technology and human interaction is crucial. While AI-driven models enhance efficiency and mitigate fraud, human intervention brings in the hand-holding and trust needed to create a truly inclusive insurance ecosystem. The right balance of technology and human touch can build trust, simplify choices and drive insurance adoption deeper.

 

The writer is chairman & group CEO, PB Fintech. The column has been edited.