The reforms implemented in 2025 mark an important phase for the life insurance sector. They bring together regulatory intent, customer focus and long-term industrial development. At their core, these changes make protection easier, more affordable and more inclusive.
“The decision to bring down the GST on life insurance premiums to zero is a meaningful step by the Finance Ministry. This reform is closely aligned with the regulator’s vision of Insurance for All by 2047. Removing the 18 percent GST will directly reduce the cost of life insurance for policyholders,” Tarun Chugh, Managing Director and Chief Executive Officer, Bajaj Life Insurance, adding that this is expected to drive renewed interest in protection-oriented products like term insurance and also growth in will support other product categories.
“Digital reforms such as the introduction of Bima ASBA will also strengthen the customer journey. They reduce friction, shorten onboarding time and create a more seamless experience from start to finish,” he said.
Structural shift
“The passage of significant amendments to the Insurance Act and the move to allow 100 percent foreign direct investment marked a structural shift, signaling the government’s long-term commitment to building a robust, well-capitalized and globally competitive insurance ecosystem,” said Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI).
In addition, the continued regulatory focus on consumer protection, governance and market conduct has helped strengthen confidence and discipline across the sector.
In the non-life insurance space, following special measures taken during the Covid-19 crisis to provide healthcare to people, there has been a consistent demand from all departments for reduction/elimination of Goods and Services Tax (GST) on health insurance premium.
According to Joydeep Saha, Managing Director and Chief Executive Officer of ManipalCigna Health Insurance, 2025 was a defining year for the Indian health insurance industry, underscoring the importance of affordability, trust and innovation in shaping the future of healthcare protection.
Healthcare inflation
The reduction/removal of GST from health insurance premium came at a critical time when healthcare inflation in India is rising at 12 to 14 percent per year, far exceeding headline inflation. “By reducing the cost of coverage, the GST exemption has made health insurance more accessible, especially for first-time buyers and middle-income families. It is a decisive step in ensuring that financial protection is a necessity for every household,” Saha said.
The year 2026 is likely to see a further boost to the sector with greater digital adoption, a sharper focus on long-term protection, more personalized solutions and continued policy clarity that will help expand coverage across India. “All these factors together will strengthen confidence, improve accessibility and position life insurance as a key pillar of financial security for Indian households,” Chugh said.
Inflection point
Greater traction is also expected in 2026. The health insurance industry is at a turning point. The focus needs to be sharpened on affordability, inclusivity and adequacy of coverage in the long term, but achieving this will require a fundamental change in mindset, Saha said.
Industry experts are now pitching for out-of-the-box thinking to move the industry forward. It must move from analyzing data alone to making real-world predictions, and from claims management to healthcare collaboration.
In the context of the challenges of managing expenditure following the VAT waiver, which has left the sector without any benefit from the input tax credit, now is the time to design solutions that balance innovation with sustainable pricing models. Technology will be the catalyst, enabling predictive insights, preventative health programs, wellness-related offerings and digital engagement that improve health outcomes while effectively controlling costs. By focusing on consumer awareness, technology has been a key enabler for better reach and service.
Faster resolution
“The increased adoption of AI/GenAI and technology has enabled insurers to address factors such as faster claims resolution, hyper-personalization of communications, improving fraud detection, accelerating complaint resolution, and more – strengthening trust between policyholders and insurers,” said Anuj Tyagi, Managing Director and Chief Executive Officer, HDFC ERGO General Insurance.
Furthermore, the insurers’ collaboration with the new digital partners and the launch of data-driven digital ecosystems have managed to erase the challenges of geographical boundaries, reaching the uninsured population seamlessly and within seconds. Insurers are increasingly using every customer contact point, making it accessible in the true sense of the word.
On the regulatory front, the migration to the Risk Based Capital (RBC) regulatory framework for the Indian insurance sector will enable insurers to maintain capital commensurate with the risks they undertake, thereby facilitating financial stability and protection of policyholder interests. In August 2025, IRDAI had directed insurers to conduct a second impact study in this regard.
In the financial year 2024-25, the insurance sector (both life and non-life) collected a total premium of ₹11.93 lakh crore, of which life insurance accounted for ₹8.86 lakh crore, while the rest came from non-life insurance, according to IRDAI data. The insurers, including life, general and standalone healthcare players, settled claims of ₹8.36 lakh crore.
Published on December 29, 2025
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