Navigating India’s insurance framework: Issues and challenges for the Indian insurance industry

Abstract

The Indian insurance sector, a critical component of the country’s financial system, has experienced transformative regulatory reforms and significant market expansion over the past two decades. However, despite increased penetration, heightened consumer awareness, and technological integration, the industry continues to grapple with structural inefficiencies, regulatory complexities, and evolving risk landscapes. This paper critically examines the issues and challenges confronting the Indian insurance industry within the framework established by the Insurance Regulatory and Development Authority of India (IRDAI) and related statutes. It analyses key regulatory developments, operational bottlenecks, and market dynamics influencing both life and non-life segments. Special attention is given to persistent gaps in financial literacy, product mis-selling, solvency requirements, and compliance burdens, as well as the challenges posed by climate change, cyber risk, and health emergencies. The study synthesizes recent empirical research, industry reports, and policy analyses to identify underlying causes of inefficiencies and propose reform-oriented strategies. Findings indicate that while the regulatory framework has succeeded in stabilizing the market and protecting policyholders, adaptive governance, capacity building, and data-driven policy mechanisms are necessary to ensure resilience and sustainable growth in the evolving economic and risk environment.