Insurance for All by 2047: What India needs to fix to meet the goal

Irdai's 'Insurance for All by 2047' vision aims universal coverage, but falling penetration, rural access gaps and affordability challenges raise questions over achieving the target

The Insurance Regulatory and Development Authority of India (Irdai) has anchored its flagship vision to India's centenary year of independence. 'Insurance for All by 2047' aims to provide every citizen with appropriate life, health, and property insurance coverage while supporting enterprises with suitable insurance solutions.

 

Presently the numbers tell a sobering story. India's insurance penetration dropped to 3.7 per cent in FY25, marking the third consecutive year of decline from the pandemic-era peak of 4.2 per cent. Life insurance penetration fell from 2.8 per cent to 2.7 per cent, while non-life insurance remained flat at 1 per cent. The global average stands at 7.3 per cent, nearly double India's position. Insurance density rose marginally from $95 to $97 per capita, but remains a fraction of the global average of $943. India remains the 10th largest insurance market globally with a 1.8 per cent market share.

 

 

The declining trend contradicts absolute growth. The overall insurance sector collected premiums worth ₹11.93 trillion in FY 2024-25, issued 41.84 crore policies, and paid claims of ₹8.36 trillion. This paradox reveals an economy growing faster than insurance adoption, leaving gaps that widen as GDP expands.

 

Bima Trinity and distribution initiatives

 

Irdai's response centers on the 'Bima Trinity', a three-pronged digital infrastructure announced in February 2025.

 

Bima Sugam is a digital marketplace designed to function as the UPI of insurance, allowing customers to buy, renew, compare, manage policies, settle claims, and file grievances through a single interface. The Bima Sugam India Federation has completed incorporation, with industry participants preparing to capitalise the platform.

 

Bima Vistaar represents India's first composite insurance product, covering death, personal accident, property damage, and surgical hospitalisation under a single policy priced at ₹1,500 annually for individuals and ₹2,420 for families. Each coverage line offers ₹2 lakh sum assured, with health benefits providing ₹500 daily hospital cash for up to 10 days. To be launched soon.

 

Bima Vahak is Irdai's initiative to deploy insurance distribution agents in every Gram Panchayat, creating a mainly women-centric distribution channel focused on enhancing insurance inclusion in rural areas.

 

Separately, the Bima Sakhi scheme was launched by Prime Minister Narendra Modi in December 2024 as LIC's women-only distribution initiative. The scheme targeted enrolling 2 lakh women over three years and by now 2,00,000 registrations have already been crossed.

 

Regulatory levers and administrative support

 

The government and Irdai have deployed multiple levers to accelerate growth. Foreign Direct Investment limits increased to 100 per cent, allowing complete foreign ownership. Insurers can now launch new health and retail products without prior approval. Solvency norms were relaxed, with ratios for general insurers reduced from 0.70 to 0.50 and for life insurers from 0.80 to 0.60 for unit-linked business, freeing capital for deployment.

 

Effective September 22, 2025, GST on individual insurance dropped from 18 per cent to zero on selected products like term, ULIP, endowment, and health insurance, removing the perception of "tax on tragedy or necessity".

 

The Sabka Bima Sabki Raksha Act, 2025, passed in January 2026, amended foundational insurance laws to improve ease of doing business and strengthen regulatory oversight. The Act establishes a Policyholders' Education and Protection Fund and aligns data protection with the Digital Personal Data Protection Act, 2023.

 

Government schemes provide significant reach. PM Suraksha Bima Yojana and PM Jeevan Jyoti Bima Yojana have recorded cumulative enrollments exceeding 740 million since inception, demonstrating that affordability can coexist with reach when backed by banking infrastructure. However, year-on-year active policy data would provide a more accurate picture of current coverage.

 

The distribution challenge

 

Despite these initiatives, the distribution problem remains acute. The majority of 3.12 million insurance agents concentrate in tier-1 and tier-2 cities. Less than 20 per cent of Indian villages have access to formal insurance channels, though they house nearly two-thirds of the population.

 

Rural insurance penetration remains low outside crop insurance. Products are designed for urban markets, pricing fails to account for seasonal rural incomes, and distribution costs make remote areas commercially unviable. Insurance literacy in rural areas drops below 15 per cent, compared to 23 per cent nationally. Historical experiences of claim denials have created cultural resistance that technology alone cannot overcome.

 

The affordability gap persists. With average monthly rural household income between ₹8,000 and ₹10,000, even modest annual premiums become financial burdens, creating a vicious cycle that keeps insurers focused on urban markets.

 

Critical policy recommendations

 

Revising PMJJBY coverage: The Pradhan Mantri Jeevan Jyoti Bima Yojana currently offers ₹2 lakh coverage for an annual premium of ₹436. This coverage has remained static since inception. Given inflation and rising income levels, Irdai should introduce tiered coverage options — ₹5 lakh at appropriate premium and voluntary top-up to ₹10 lakh at proportionate additional premiums. These graduated options would allow beneficiaries to scale protection as economic circumstances improve while leveraging the scheme's group premium advantage, maintaining simplicity while providing meaningful protection.

 

Census-based measurement framework: India currently lacks granular data on household insurance coverage. The next census should include a dedicated module capturing insurance status at household level—identifying which family members hold which policies, aggregate sum assured, and whether coverage is individual or employer-provided. This would provide Irdai and policymakers with an accurate baseline to measure progress toward 2047, identify district-level gaps, and allocate resources effectively. Without measurement infrastructure built into census operations, the "Insurance for All" target remains aspirational rather than trackable.

 

Sabse Pehle Life Insurance: For any claim maturity proceeds, government compensations, court settlements, or any prize money exceeding a certain amount, a portion of it can be used for annuitisation through an approved platform like ONDC or Bima Sugam. Recipients would receive notification well in advance with three options: accept the annuity fully, opt out partially, or opt out fully. The platform would display competing annuity quotes from multiple insurers, ensuring transparency and competitive pricing. This system would channel billions into long-term annuity pools, provide steady retirement income, and create stable capital for nation-building projects while respecting individual autonomy. We can also have a one-time term insurance premium recovered from all such payments so that the person is sufficiently insured.

 

Accelerating progress

 

Distribution networks must leverage self-help groups, primary agricultural credit societies, farmer producer organisations, and panchayats as partners, building trust through existing social capital. Financial literacy campaigns need massive scaling, integrating insurance into school curricula and government welfare programs.

 

Similar to the SLBC banking review, a State Level Insurance Committee for Enhancement of insurance coverage (SLICE) should examine insurance coverage progress periodically. Like the high-level banking committee announced in the recent budget, a high-level insurance committee can track and positively influence the progress.

 

The Road to 2047

 

Twenty-one years until 2047 demands bringing around 1 billion additional Indians under insurance protection, requiring roughly 50 million new policyholders annually. The Swiss Re Institute projects 11.1 per cent annual growth in insurance, the fastest among G20 nations through 2028. This growth must be inclusive rather than urban-concentrated.

 

Bima Trinity represents genuine infrastructure innovation, reducing transaction costs, simplifying customer journeys, and acknowledging last-mile access. The success of Bima Sakhi, with over 2,00,000 women enrolled, demonstrates strong latent demand for women-centric distribution models.

 

The vision is achievable if infrastructure building, favourable regulatory environment, and suitable product design converge with commercial incentives, social commitment, technological innovation, and state-level support at the required scale. Then the aspiration has a great chance of actualisation.

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(T C Suseel Kumar is former Managing Director, LIC of India, currently Independent Director on multiple Boards, and R Sudhakar is former Executive Director of LIC of India)

 

(Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper)