Insurance industry needs shift from push to pull model

The insurance industry in India must transition from a high-commission push model to a pull model where consumers actively seek products, argues a Hindustan Times analysis. Despite decades of high-cost distribution, insurance penetration remains low, with life insurance penetration falling to 2.7% in FY25 and non-life flat at 1%. Life insurers paid 18% more commission in FY25 while premium grew only 6.7%, and the high-commission first-year premium grew 40% against 9% renewal commission growth.

Mis-selling complaints against life insurers rose over 14% in FY25, while complaints against general and health insurers jumped 45%, with more than two-thirds claim-related. The analysis suggests five steps for reform: cleaning products of tricks and unfair costs, underwriting at point of sale rather than claim, making sellers responsible for suitable products and claim facilitation, improving disclosures, and allowing policy-holders to rate service providers.