India's insurance penetration has significant growth potential, fintech can help unlock it: Finance Ministry Official
New Delhi, August 7
Fintech firms can play a pivotal role in expanding India's insurance penetration by developing personalised products for the "missing middle"-- consumers who can afford insurance but lack suitable offerings--a senior government official, Abhijit Phukon, Economic Advisor, Department of Financial Services, Ministry of Finance, Government of India.
Addressing the India International Fintech Festival on Friday, he noted that the country's insurance penetration of 4-5 per cent remains well below the global average; thus India has plenty of scope in the sector.
"We need to come up with a lot of products, give choices to the consumers alongside, you know, creating awareness..." he said stressing, "...fintechs can play a greater role by designing... personalised products required for different customer segments..."
Phukon further added that fintech has a critical role in improving productivity, reducing costs and ensuring last-mile delivery of financial services as India targets becoming a USD 30 trillion economy.
Highlighting India's progress in financial inclusion, he said the country has led the world's largest financial inclusion programme. However, he noted that financial inclusion should go beyond opening bank accounts and focus on ensuring greater usage of these accounts while improving the financial well-being of account holders.
"We need to actually move from financial inclusion 1.0 to financial inclusion 2.0 -- from financial inclusion to financial well-being to financial empowerment," he said, noting Digital Public Infrastructure (DPI 1.0) is based on a certain thematic approach like interoperability, scale and speed.
Apart from this, Phukon stressed the need to democratise AI computing infrastructure, bridge technology skill gaps and strengthen industry-academia collaboration to build a future-ready workforce.
He further stressed that fraud prevention mechanisms should be built at the ecosystem level through shared services and common platforms, rather than by individual entities acting in isolation.
He advocated moving away from isolated, silo-based approaches to fraud prevention towards a more open and collaborative ecosystem model built on shared platforms and services. He also stressed that while artificial intelligence is essential to strengthening fraud detection and prevention, its deployment must be accompanied by adequate safeguards and guardrails.
— ANI
Reader Comments
The "missing middle" point is spot on. I work in a startup and many of my colleagues earn well but skip insurance because either the premiums are too high for the coverage or the claim process looks intimidating. If fintech apps can make it as easy as UPI – tap, choose, pay – then why not? But the last-mile issue is real too. My parents in a small town still rely on an agent who visits home. Digital alone won't cut it in tier-3 cities. Need a hybrid model going forward.
Good points by the official, but where is the focus on fraud? 🚨 Unless we build a strong fraud detection system at the ecosystem level, fintech-led insurance will end up like the loan apps mess we saw during COVID. Too many people got duped by fake apps. Also, the "USD 30 trillion economy" ambition sounds nice, but let's first ensure the rupees in our pockets have enough value when claiming insurance. Transparency and quick settlement matter more than fancy products.
Very impressed with the emphasis on financial well-being and empowerment beyond just opening accounts. We have Jan Dhan accounts but many are still zero balance. Insurance shouldn't be a luxury; it should be woven into everyday financial planning. For women especially, there is a huge gap in customised health and term products. I hope fintech brings more women-centric policies with lower premiums and better maternity coverage. Also, please make the claim process simpler!
Interesting perspective from the Indian government. I work in insurance tech back in the US and our penetration is much higher because of employer-sponsored plans and auto-enrollment in 401(k)s. India could learn from that – offering payroll-deductible micro-insurance through companies. Also, AI for fraud prevention is great, but it must go hand-in-hand with strict data privacy laws. Excited to see how fintech and insurtech collaboration shapes India's journey toward $30 trillion economy.
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