AI alone won’t close India’s insurance gap as NITI Aayog seeks industry help to reach the ‘missing middle’

Artificial intelligence may help insurers reach more Indians, but technology alone will not close the country's insurance gap, with government and private players needing to work together to bring the large "missing middle" under adequate coverage, NITI Aayog's Sanjeet Singh said at the Global FinTech Fest (GFF) 2026.

Singh, Programme Director, Economics and Finance-II, Trade & Commerce, Disinvestment and International Cooperation at NITI Aayog, said AI should be viewed as an enabler of India's broader development objectives rather than as a standalone solution to the country's insurance challenges.

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“AI and insurance, AI and national goals, AI and whatever, doesn't have to be discussed as separate subjects. AI is a tool,” Singh said.

The government is looking to raise India's insurance penetration from around 3.7% to 4.7% as it works towards the wider goal of insurance for all, according to Singh. But expanding coverage will require the industry to address accessibility, affordability, awareness and trust alongside the adoption of new technology.

A major challenge is India's "missing middle" — people who fall between government-supported insurance programmes and the segment traditionally served by private insurers.

Singh said NITI Aayog has already held discussions with private-sector companies about developing a collaborative approach to serve this group.

Rather than expecting either the government or businesses to tackle the problem alone, Singh called for greater cooperation between the two sides.

“The private sector has to thrive. You have to make money,” Singh said, while stressing that businesses also have a role to play in meeting India's wider development objectives.

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“This is not a problem that the government has to solve... This is an opportunity also,” Singh said, inviting insurers and other private-sector participants to work with the government on expanding coverage.

He also warned that greater use of AI should not create another layer of exclusion, particularly for people who lack reliable internet access or digital capabilities.

The availability of skilled workers capable of deploying AI across the insurance industry could emerge as another constraint.

“Where are the AI professionals who can really, really take over?” Singh said.

Having insurance may not mean having enough insurance

The discussion also raised questions about how India measures its insurance progress.

PB Fintech Joint Group CEO Sarbvir Singh said the commonly used measure of insurance premiums as a percentage of GDP does not necessarily show whether households have sufficient financial protection.

Instead, life insurance could be measured by the sum assured per person and health insurance through the sum insured per family, he said.

“If we measure the right number, we work towards it,” Singh said.

The distinction is significant because owning an insurance policy does not necessarily mean the policyholder has enough coverage to absorb a major financial shock.

According to Singh, the industry's average life insurance cover is around ₹4 lakh per policy, compared with an average sum assured of about ₹81 lakh among Policybazaar customers.

He also argued that there are limits to how far private insurers can go in covering India's lowest-income households without government support.

“The private sector cannot cover the bottom of the pyramid. It is not possible,” he said.

That makes defining the respective responsibilities of the government and private insurers important as India pursues universal insurance coverage.

AI can provide scale, but trust will be critical

SBI General Insurance Managing Director and CEO Naveen Chandra Jha said scale would be crucial to expanding India's insured population, with AI potentially allowing insurers to combine greater reach with convenience and intelligence.

SBI General and the wider SBI ecosystem covered around 2.39 crore policies in the previous year, according to Jha. He said the industry would need to bring substantially more individuals, businesses and properties under insurance.

However, greater use of AI also means insurers will increasingly rely on customer data for underwriting, risk assessment and personalised products, making consumer trust an important part of the transition.

Jha said consumer research indicated that more than 80% of customers were concerned about protecting their data, even as around two-thirds were willing to share some information in return for personalisation.

“Trust is a precondition to personalisation,” he said.

Insurers should therefore distinguish between core information required for underwriting and optional data, including lifestyle and wellness information, that customers can choose to share for personalised services, Jha said.

Optional information should operate within a consent-based framework, with consumers receiving clear benefits for sharing it.

For example, wellness information such as step counts could be used to offer customers certain benefits. Those benefits could subsequently be withdrawn if a customer revokes consent to use that information.

Technology to move across the insurance chain

Prudential Health India MD and CEO (Designate) Amit Dave said newer insurers have an opportunity to build their businesses around not only increasing insurance penetration but also ensuring customers receive adequate protection.

The COVID-19 pandemic helped increase awareness of health insurance, while rising per-capita incomes have improved the ability of consumers to purchase coverage, according to Dave.

Technology, he said, is likely to be deployed throughout the insurance value chain rather than functioning merely as an additional digital layer.

That could include customer onboarding, underwriting and risk assessment as well as pre-authorisation and claims settlement.

The panel also highlighted the need to improve insurance and risk literacy, with Jha pointing out that many Indian consumers understand the importance of insurance only after experiencing a financial or health shock.

Closing India's insurance gap, therefore, is likely to require more than simply putting AI into existing insurance processes. Greater scale will have to be accompanied by adequate coverage, stronger consumer trust and risk awareness, while government and private insurers will need to determine how responsibility for India's still-uninsured population is shared.