Navigating the New Frontier: Regulatory Challenges and Compliance in India's AI-Driven Insurance Transformation

Abstract

The fast pace of digitalization and expansive utilization of the Artificial Intelligence (AI) create an earthquake in the Indian insurance market. This reform is projected to make the national vision of Insurance to all people through an achievement by 2047 and bring efficiency on the level that has never been attained before, higher penetration of the markets as well as higher experiences by the customers. But it is also an environment of tough and dynamic regulation matters that comes along with the technological breakthrough. The current paper is a critical reflection of the main regulation and compliance challenges of the Indian insurance sector with regard to the implementation of AI and digital technologies. It talks about the interrelation between the rule of Insurance Regulatory and Development Authority of India (IRDAI), Digital Personal Data Protection Act (DPDP Act) 2023, and the system of AI regulation on the national level developed by the Ministry of Electronics and Information Technology (MeitY). Among the most pressing issues, it is possible to mention the preservation of the privacy of information, the absence of the prejudice of algorithms, the creation of rigid accountability/liability boundaries, and enhanced measures of cybersecurity. The postulation of this paper is that to exist in this new frontier is to be alive and not as southern watch keepers but as one to ingrain in their very genes the postulates of responsible AI of elements of fairness, transparency and accountability. Through regulatory sandboxes, effective internal regulation, and strong cooperation with policy-makers, Indian insurers will be in a position to tap the entire potential of AI and the establishment of an insurable core of trust, safety, or inclusion as their next insurance ecosystem.