IRDAI's recent product reforms aim to widen insurance coverage. Assess them in light of India's low insurance penetration.

India's insurance penetration, measured as premiums as a share of GDP, slipped to about 3.7% in 2023-24 [1]. That is well below the global average. IRDAI's recent product reforms widen what can be bought, but low penetration also comes from poor affordability and low trust, which these reforms only partly address.

Reforms and their promise

• No age bar in health cover: The IRDAI (Insurance Products) Regulations, 2024 require insurers to offer health plans to all age groups. They also permit tailored products for senior citizens, students and children [2].
• Simpler product framework: The same regulations folded several older product rules into one framework, meant to speed up product innovation and improve pricing governance [2]. This makes segment-specific products for rural households and MSMEs easier to launch.
• Long-term motor cover: IRDAI's December 2022 draft proposed 3-year cover for cars and 5-year cover for two-wheelers, with the No-Claim Bonus (NCB) carried over [3]. This would reduce lapses at annual renewal.

Limitations

• Access is not affordability: Seniors can now buy cover, but premiums and co-payments rise with age and bill size. Much of the cost therefore stays with the household [4].
• Opaque terms: Policyholders often misread terms like "excess" (the deductible). A small claim can wipe out an NCB worth more than the payout [4]. Confusion of this kind undermines trust and renewals.
• Health costs still fall on households: Out-of-pocket expenditure was still 39.4% of total health expenditure in 2021-22 [5]. Private cover has not yet taken much of the burden off families.
• Unfinished design: The long-term motor proposal was only a draft. It does not yet say how a first-year claim affects the NCB for the rest of the term [3].
• Demand gap: Penetration fell even as product rules were liberalised [1], so product reform alone does not drive uptake.

Way forward

• A mandatory one-page key-features sheet, plus a claim-time statement showing the net payout after excess and any NCB lost.
• Pair private cover with Ayushman Bharat PM-JAY for the poorest households, and push micro-insurance through regional languages and local channels.

IRDAI's reforms have opened the door to wider coverage. The task now is to make cover affordable, easy to understand and trusted, so that "Insurance for All by 2047" becomes real financial protection, in line with SDG 3.8 on universal health coverage.