The Indian Parliament passed the bill to allow 100% FDI in the insurance sector on Wednesday, December 17. A day after the Lok Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, the Rajya Sabha on Wednesday passed the bill, removing the earlier cap of 74 per cent FDI in the insurance sector. Experts believe the bill is a major positive and can add significant capabilities to the sector. Jayant Walia, a Chartered Accountant, Harvard Business School MBA, and Senior Director of Business Development at Gainbridge, shared his views on why insurance remains an under-penetrated sector in India and how its expansion can be improved. Here are the edited excerpts of the interview:
Reasons behind the underpenetration of insurance in India
A lot of insurance is still sold rather than bought. This is especially true for complex, long-duration products like insurance-linked savings plans and annuities, and it’s not unique to India. You see similar behaviour in the US as well.
The underlying drivers are trust and friction. Insurance is rightly regulated, but the experience can still be document-heavy and difficult to evaluate.
Customers worry about whether claims will be smooth when it matters, and if that question is unresolved, adoption slows.
The opportunity is to shift insurance from a high-pressure sales moment to a trusted, contextual product.
When distribution happens through channels people already trust, and products are designed to be easy to understand and easy to service, customers are far more likely to adopt.
How can the insurance market be improved in India?
First, design for the full lifecycle. The real product is servicing and claims, not just the sale.
If policy servicing is transparent and claims are predictable and fast, trust builds and penetration follows.
Second, connect insurance to the broader theme of financial well-being. Protection should not feel like a separate category.
It should be part of a holistic plan alongside savings and retirement, delivered in a way that is convenient and relevant to the customer’s life stage.
Technology can enable simpler explanations, smarter nudges, and more efficient servicing so people stay covered as their needs change.
Third, reduce friction through regulated, consent-based data sharing and open banking-style standards.
When customers can securely share the right information with permission, processes like onboarding, underwriting, renewals, and claims can become meaningfully faster and less paperwork-driven while still respecting consumer protection.
India’s regulatory environment is shaping the pace of innovation in financial services
India’s regulators have generally aimed to balance innovation with consumer protection, and that balance will continue to set the pace.
The biggest accelerators are clear rules, pathways to test responsibly, and enabling infrastructure that reduces compliance overhead through standardisation.
Two themes are especially important. One is capital. Recent reforms, including the December 17, 2025, law raising the insurance FDI cap from 74% to 100%, can attract more long-term investment and capability into the sector.
The second is data and interoperability. Regulated, consent-driven data sharing frameworks and open banking-style infrastructure can create a reliable pipeline for building better products, faster, without compromising user control.
Finally, advice matters. India still has limited access to true, regulated, fiduciary-style guidance for the mass market.
Expanding the availability of compliant advisory models and planners can improve overall financial health, and that naturally raises the adoption of retirement planning and protection products like insurance.
Areas of improvement in the Indian financial sector
India’s financial sector has evolved significantly over the years, but there remain areas of opportunity.
India has built strong digital foundations. The next wave is about outcomes, not just rails. That means making financial products easier to access inside real-life journeys, and ensuring the experience holds up end to end.
Two areas stand out. First is holistic execution across the full lifecycle: discovery, eligibility, onboarding, servicing, and ongoing engagement.
That is hard to do at scale without API driven infrastructure, because most journeys touch multiple systems and institutions.
A simple example is insurance or long-term savings. It’s not enough to make sign-up easy if renewals, updates, support, and resolution are still cumbersome.
Second is improving distribution and access across the spectrum, including financial planning, protection, and retirement.
Strong rails plus easier access to guidance and products can help more Indians move from basic accounts to structured saving, insurance protection, and long-term wealth building.
Points one must keep in mind while retirement planning
It’s a good sign that people are planning earlier, and it’s necessary because people are living longer.
Retirement planning has to account for longevity risk, inflation, and healthcare costs, which can be the biggest wild card.
The second point is that the art lies in execution. India offers many investment vehicles, but outcomes depend on consistent contribution, realistic assumptions, and an allocation you can stick with through cycles.
It helps to think in layers: one part of the portfolio for liquidity and protection, so you have peace of mind, and another part for long-term growth to beat inflation.
And finally, use the country’s retirement structures intelligently. If you are using EPF and NPS, think about your overall debt exposure because EPF already gives you a meaningful fixed income component.
That should inform how you allocate within NPS and the rest of your portfolio. The goal is not to optimise every rupee for return, but to build a plan that survives real life and still compounds over decades.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
