Deloitte India Union Budget 2025-26 Report: Strategic Recommendations for Insurance Growth

The insurance sector in India has been experiencing steady growth since December 2023, though momentum slowed during May–June 2024. According to Deloitte, with the country’s growing GDP and expanding middle class, the sector is poised for further development.

As per Deloitte’s report, life insurance saw a growth of about 12.1% in new policies by June 2024, with LIC slightly outpacing private insurers. The non-life insurance segment also saw growth, with a 15.5% rise in gross premiums in the first two months of FY25. 

The insurance sector remains optimistic, driven by government initiatives like “Insurance for All” by 2047 and other reforms set to benefit the industry. However, challenges such as rising claims costs, declining margins in traditional lines, and regulatory pressures continue to pose hurdles.

In its Budget Expectations for 2025 report released in January, Deloitte emphasised the need for strategic reforms to drive growth and innovation in the insurance sector. Let’s take a look at its expectations and policy recommendations.

Deloitte’s Strategic Insights for Boosting Insurance Market

• Relaxing FDI regulations 

To attract greater participation in India’s insurance sector, Deloitte suggests relaxing foreign direct investment (FDI) regulations. 

The immense potential of the Indian market is drawing global insurance players from more penetrated markets such as Japan, Australia, and New Zealand. By easing the process for foreign firms to invest in India, the sector’s ability to underwrite policies and attract investment can be strengthened, facilitating the entry of more players or partnerships with Indian companies.

• A shift towards digital platforms 

Deloitte recommends that the government allocate budgetary support for digital infrastructure, easing the regulatory burden for insurance companies.

Additionally, policies should be introduced to ensure fair collection and use of customer data, enabling insurers to build data-driven solutions for underwriting, risk management, and claims processing. This would result in more AI-powered and data-backed products, improving customer service and claims operations.

• Collaboration between private insurers and public health schemes

 By allocating budget provisions to boost affordability and coverage, especially under the “Insurance for All” scheme, insurers can make their products more accessible. This collaboration will increase life and health insurance adoption in underserved regions, ultimately improving financial inclusion and providing protection to millions of citizens.

Policy Recommendations for Advancing Insurance Market

• Budget Provisions for Public-Private Partnerships

Deloitte recommends the establishment of a dedicated advisory board made up of industry leaders, policymakers, and academic experts. This board would focus on accelerating the “Insurance for All” initiatives by fostering collaboration between the public and private sectors. The expected impact includes driving innovation, improving insurance accessibility and affordability, and increasing awareness. 

• Tackling Supply-Side Issues and Enhancing Talent Pipeline

There is a pressing need to address the limited supply of skilled professionals in the insurance sector. Deloitte suggests establishing more institutions to train individuals in both technical and non-technical areas, as the current National Insurance Institute is not sufficient. Attracting global talent or leveraging the Global Capability Centres (GCC) model could provide the necessary expertise, particularly in back-office functions.

Deloitte also recommends evaluating the impact of government schemes, such as Ayushman Bharat, on private insurance premiums and suggests setting up another reinsurance company to accommodate future sector growth.

Conclusion

Deloitte’s report outlines a clear roadmap for the insurance sector’s growth, focusing on policy reforms and technological advancements. By implementing these recommendations, the sector can navigate existing challenges, drive innovation, and enhance customer accessibility. 

This approach promises to not only strengthen the market but also ensure that India’s insurance landscape becomes more inclusive and competitive in the coming years. The proactive steps outlined could be pivotal in achieving long-term sectoral growth and stability.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.