India’s insurance landscape has undergone several consumer-facing changes through 2025. These include the creation of an industry-wide fraud-prevention repository, faster claims disposal using artificial intelligence and machine learning, and, most recently, the opening up of the sector to more insurers.
While Insurance Regulatory and Development Authority of India (Irdai) has in the past issued guidelines on restricting expenses of management, the new insurance bill, Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, formally empowers the regulator to set limits on commissions to curb misselling and prescribe a procedure to disclose the commission.
It also enhances Irdai’s enforcement powers. Penalties for serious violations can now go up to ₹10 crore, compared with ₹1 crore earlier (excluding penalties of up to ₹5 lakh per day for delayed compliance).
Delayed filings of claim details, including date of filing and reason for rejection, could lead to penalties as high as ₹1 lakh per day. It can even conduct search and seizures on insurers, brokers, banks, non-banking finance companies, distributors or third-party associates in case of tampering of proof or documents for fraud.
The new bill also formally recognises repositories for e-policy servicing.
These moves could collectively rebuild trust in insurance and enhance insurance adoption in India, which dropped to 3.7% in the last fiscal year from 4% in 2023-24, even as non-life insurers witnessed a rise in net incurred claims ratio to 82.88% in 2024-25.
“India still has relatively low insurance penetration and uneven social security coverage. Building trust in formal financial protection is essential. Reforms like these create an environment for consumers to feel assured and enhance insurance adoption,” says Amit Chhabra, CBO - general insurance at Policybazaar.
These reforms, along with the reduction in goods and services tax (GST), would lead to an increase in insurance penetration. Lower GST boosted insurance sales, with first-time buyers accounting for 30% of overall policyholders in 2025–26, according to the Care Health Insurance Trends Report 2025.
“In November, a spike in insurance purchases was seen as an impact of 18% GST, which saw first-time insurance buyers too. However, the spike was difficult to sustain,” says Abhishek Bondia, co-founder, insure-tech firm SecureNow.
Bondia says sustained growth will depend on policy personalisation and stronger claims assistance—both of which require technology investments.
“Claim assistance is lacking and that is where money needs to be invested. Who will invest in claims assistance is the question – whether it would be a distributor or insurer,” says Bondia.
Greater technology investment by insurtech firms and foreign players could improve consumer experience, particularly during claims, which remain the real test of insurance as a product.
Earlier this year, regulatory changes also ensured insurers cannot deny new policies solely on the basis of age, and reduced the waiting period for pre-existing diseases to 36 months.
Fastracking complaints
The insurance ombudsman now has more teeth with changes announced in July 2025 (internal ombudsman creation) and in November 2025 (draft amendments on ombudsman scheme).
These moves create three layers of grievance redressal structure– internal ombudsman (part of insurance firm), 18 insurance ombudsman offices, and a new appellate authority.
A new position of internal insurance ombudsman – stationed within the insurance company – would hear the policyholder’s complaint and record a “reasoned decision” in each case. This decision is binding on the insurer.
This will improve “existing complaint management mechanism for fairer disposal of cases, give customers one more layer to appeal and reduce burden on the external ombudsman,” says Parag Raja, MD & CEO, Bharti AXA Life Insurance.
Insurance brokers, too, are now under the ombudsman's jurisdiction, which can now hear complaints exceeding the ₹ 50 lakh limit previously.
With health policies of up to ₹1 crore now being sold to retail customers, there is concern that ombudsman resources may be stretched. “More complaints would be permitted, but the resolution bandwidth isn’t available,” says a former ombudsman.
Further, imposition of penalties can be suggested to Irdai if the insurer or broker has been unjust, non-compliant or harassed policyholders. “For insurers and brokers, clearer accountability and stricter penalties will encourage higher standards of conduct and service discipline,” says Vineet Agarwal, head of insurance at PL Capital.
Clearer timelines have been set with stricter deadlines of 30 days for insurers to comply with ombudsman recommendations and awards.
A major advancement in the timely execution of complaints under the ombudsman would be digitisation.
“Building a comprehensive digital complaint-management platform is a significant advancement and will allow policyholders to submit complaints online, upload documents, record consent for mediation, track the status of their case and even file appeals against an ombudsman’s award,” says Chhabra of Policybazaar.
Tackling complaints backlog
Justice delayed is justice denied, agrees the regulator and hence several moves have been planned to increase efficiency and reduce the pending claims rate at select insurance ombudsman offices.
“The move of transferring cases to other ombudsmen offices, where the load is lower, is a move that will reduce the pendency ratio in areas such as Mumbai, Delhi, Hyderabad,” says Segar Sampathkumar, director- health, General Insurance Council.
However, language challenges could stem when such hearings are planned at a non-local ombudsman office. “Language barriers would have to be overcome,” says an industry veteran not willing to be named.
The proposal to introduce an appellate authority has also drawn criticism. The authority, the third layer in the grievance redressal mechanism, can be approached within 30 days.
"Too many appeals would clog the redressal process as it would be akin to an additional ombudsman. Ombudsman was approached because the issue wasn’t resolved. If a claim gets rejected, the ombudsman has the last say,” says a former non-life insurance chief.
There is a need to reduce the overall timeline in grievance redressal for the sake of individuals who are battling health issues or lose a loved one.
“Awards by Ombudsman should be non-appealable as it defeats the purpose of having an ombudsman. A couple of individuals out of 10 knock at ombudsman’s doorstep and an appeal will delay the process of justice,” says Hari Radhakrishnan, regional director at First Policy Insurance.
Experts also point to ambiguities in the draft amendments. “Penalty would be awarded for unjust behaviour says the draft. Instead, the regulations should offer more clarity and be precise. There should also be a charter of rights on what policyholders can expect from insurers,” says Radhakrishnan.
Claims handling and documentation also require standardisation. The moratorium clause in health insurance, which allows insurers to invoke fraud exceptions has resulted in a grey area in the regulation, "due to which every non-disclosure is rejected by insurers, even 10-15-20 years later. There is a dire need to define fraud specifically,” says Mahavir Chopra, founder of insurance advisory Beshak.org.
What still needs fixing
Currently, about 90% of the cases are disposed of after a personal online hearing of the matter by the ombudsman. A section of the industry has been requesting that personal hearing need not be necessary in each and every case and can be done away with certain categories of grievances, where digital filing of complaint and documents should suffice a verdict.
“Removal of personal hearing is needed as the process will get clogged. Minor grievances can be communicated in writing. This resolves the issue mutually and erases the contentions,” says a former ombudsman, not willing to be named.
Data from the Council of Insurance Ombudsman’s annual report shows many complaints are rejected as non-entertainable—because it was beyond the scope of rules (1,802 cases) or not in Ombudsman’s jurisdiction (2,220 cases). Similarly, 1750 plus cases were rejected as they didn’t write to the insurance company before approaching the Ombudsman.
This points to a lack of awareness among consumers. They need hand holding during the hearing.
“A policyholder currently can’t represent through agent/ advocate. Agents and brokers should be permitted to represent the matter on behalf of the policyholder, as often the information and knowledge are lacking,” says a distributor.
Experts also argue that ombudsmen should be empowered to proactively guide insurers and standardise practices based on recurring complaints.
“The same matter has been litigated several times. Ombudsman should be empowered to proactively guide insurers or standardise procedures based on the frequently complained matter,” says Radhakrishnan.
Irdai data shows 54% of the total complaints pertained to health insurance.
Finally, earlier regulatory changes—particularly the ‘use and file’ product approval mechanism—have had unintended consequences. While faster product launches helped insurers, frequent mid-year changes in policy terms have confused customers.
“With continuous changes, it is challenging to have a handle on what the product really offers,” says Chopra, pointing to modifications in features, riders and room limits.
Policy wording for health insurance does not define what the product offers. "There is a lack of a source document to refer to as a contract, before buying the policy. This needs to change,” Chopra adds.