Artificial intelligence can help India’s insurance industry expand its reach, but technology alone will not be enough to close the country’s insurance gap, NITI Aayog has said. The government policy think tank has called for greater collaboration between the government and private-sector insurers to bring the country’s large “missing middle” under adequate insurance coverage.
The issue was highlighted by Sanjeet Singh, Programme Director at NITI Aayog, during the Global FinTech Fest 2026. Singh said AI should be viewed as a tool that can support India’s broader development objectives rather than as a standalone solution to the country’s insurance challenges.
According to the discussion, the government is working towards increasing India’s insurance penetration from around 3.7% to 4.7% as part of the broader objective of achieving insurance for all. However, improving penetration will require insurers and policymakers to address affordability, accessibility, awareness and consumer trust alongside technology adoption.
NITI Aayog Seeks Public-Private Approach for Missing Middle
The “missing middle” refers to people who remain outside adequate insurance coverage despite not necessarily falling within the poorest sections that receive government-supported schemes. At the same time, many are not sufficiently covered by private or social insurance arrangements.
Singh said NITI Aayog has already held discussions with private-sector companies on developing a collaborative approach for this segment. He emphasised that the government and industry would need to define their respective roles instead of expecting either side to address the coverage gap independently.
NITI Aayog’s focus on the missing middle is not new. Its 2021 report on health insurance identified a substantial section of India’s population without adequate health insurance and recommended greater use of private voluntary insurance, along with possible use of government infrastructure and schemes to expand coverage.
Singh also cautioned that excessive dependence on technology could create another form of exclusion. Consumers without reliable internet access or sufficient digital capabilities could find it difficult to benefit from increasingly technology-driven insurance services. The availability of skilled professionals capable of implementing AI at scale could also become a constraint for the industry.
Adequate Insurance and Consumer Trust Remain Key
The discussion also highlighted the difference between having an insurance policy and having sufficient financial protection. PB Fintech Joint Group CEO Sarbvir Singh said traditional measures such as insurance premiums as a percentage of GDP may not fully capture whether individuals and families have adequate coverage.
He suggested that life insurance could also be assessed through the amount of cover per person, while health insurance could be evaluated through the sum insured per family. According to the report, the industry’s average life insurance cover is around ₹4 lakh per policy, compared with about ₹81 lakh among Policybazaar customers.
Consumer trust is another major consideration as insurers increasingly use AI and customer data for underwriting, risk assessment and personalised products. SBI General Insurance MD and CEO Naveen Chandra Jha said customers remain concerned about data protection, even as many are willing to share information in exchange for personalised benefits.
Industry participants also pointed to opportunities for technology across the insurance value chain, including customer onboarding, underwriting, risk assessment, pre-authorisation and claims settlement. However, improving insurance awareness and risk literacy will remain essential.
The latest discussion reinforces the view that technology can provide scale and efficiency, but expanding meaningful insurance coverage will require affordable products, stronger consumer trust, greater awareness and coordinated efforts between government and insurers.
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