Exploring the World of Composite Insurance: Reshaping India’s Future

A New Chapter in India’s Insurance Evolution

India’s insurance industry is entering a transformative phase. With rapid economic growth, a thriving middle class, and increasing internet penetration, the country is poised to become one of the world’s top six insurance markets by 2030. According to IRDAI, India’s insurance sector is projected to reach US$222 billion by 2026, fueled by rising financial awareness and digital adoption.

However, the current regulatory framework — which mandates separate licenses for life, general, and health insurance — has long constrained growth and innovation. Recognizing this, the Indian government has proposed a composite insurance license that allows insurers to offer multiple types of coverage under one roof.

This whitepaper explores how the introduction of composite insurance could revolutionize the Indian market by streamlining operations, improving customer experience, and creating new opportunities for insurers to innovate.

The Rise of India’s Insurance Market

India’s insurance industry has grown steadily in both life and non-life segments. Between April 2023 and February 2024, the life insurance sector reported new business premiums worth US$38.2 billion, while the non-life sector witnessed a 14.86% increase, reaching nearly US$17.3 billion in premium income — largely driven by health and motor insurance.

This strong growth reflects an increasing appetite for financial protection among India’s population. A composite insurance framework could accelerate this momentum further, allowing insurers to diversify their offerings, strengthen customer relationships, and deliver comprehensive protection solutions.

The Purpose of the Composite License

The Insurance Act of 1938 is set for a major overhaul. The proposed amendments aim to simplify insurance licensing, allowing companies to operate across multiple segments — life, general, and health — with a single composite license.

Under the proposed framework:

• Insurers will no longer need separate licenses for each insurance type.
• Minimum capital requirements will be determined by the solvency margin across all business lines, rather than separate minimum thresholds.
• Insurers will gain operational flexibility to design and deliver bundled, customer-centric products.

This change will enable insurers to achieve greater efficiency, scale, and customer reach while promoting financial inclusion across India.

The Benefits of Composite Insurance for Insurers

1. Competitive Advantage

Composite licenses empower insurers to differentiate themselves through tailored, multi-coverage solutions. This not only enhances customer retention but also positions them as end-to-end providers of financial protection.

2. Growth Opportunities

By expanding into adjacent product lines, insurers can tap into broader customer bases and increase revenue potential. For example, a life insurer can cross-sell health plans to existing policyholders, unlocking new income streams.

3. Relaxation in Capital Requirements

With diversified product portfolios, insurers can balance risks and reduce capital strain, freeing up liquidity for innovation and expansion.

4. Cross-Selling and Bundling

Composite licensing promotes cross-selling and product bundling, allowing insurers to offer holistic protection — such as combining health, life, and accident coverage into a single, convenient policy.

5. Effective Risk Management

By spreading exposure across multiple insurance types, insurers can mitigate risks related to market volatility, catastrophic events, or behavioral unpredictability, ensuring more stable profitability.

How Composite Licensing Enhances the Customer Journey?

For policyholders, the introduction of composite insurance simplifies what was once a fragmented experience. Instead of dealing with multiple insurers for life and health coverage, customers can now rely on a single provider for all their needs.

Key advantages include:

• Seamless Integration: One-stop solutions for obtaining quotes, submitting proposals, and managing claims reduce turnaround time and paperwork.
• Single Point of Contact: Customers can manage renewals, payments, and policy servicing through one unified platform.
• Next-Level Personalization: With access to holistic customer data, insurers can leverage AI and analytics to offer personalized, need-based policies.

Ultimately, composite insurance enhances transparency, convenience, and satisfaction, making insurance simpler, faster, and more human-centric.

The Challenges Ahead

While the opportunities are immense, the road to composite insurance comes with its own set of challenges.

1. Integration Complexity
   Life insurers often lack the infrastructure to accommodate health insurance workflows. Integrating these systems requires robust technology platforms, interoperability, and process standardization.

2. Document Management and Data Governance
   Handling diverse documentation across life and health products demands a comprehensive content management solution capable of managing large volumes of structured and unstructured data.

3. Evolving Compliance Requirements
   Operating across multiple segments increases regulatory exposure. Insurers must adopt dynamic compliance management systems to ensure adherence across jurisdictions.

4. Market Positioning and Targeting
   To attract the right customers, insurers must invest in market research, segmentation strategies, and targeted marketing campaigns tailored to new product combinations.

5. Rising Competition
   As more insurers enter the composite space, differentiation will depend on innovation, customer experience, and brand trust. Companies that invest in AI-driven personalization, analytics, and digital experiences will have the competitive edge.

Newgen’s Solution for Composite Insurers

Newgen’s Low-Code Digital Transformation Platform empowers insurers to embrace the composite insurance model seamlessly. The platform integrates process automation, content services, and AI/ML capabilities to modernize core systems and enable scalable, compliant operations.

Why Insurers Choose Newgen?

• Proven Expertise:
  With over 30 years of domain experience, Newgen has delivered advanced insurance solutions across life, general, and health segments for global insurers.
• Advanced Technology:
  Built on a unified low-code platform, Newgen’s solution leverages AI, ML, and automation to simplify complex workflows — from policy issuance to claims settlement.
• Customer-Centric Design:
  Every implementation is tailored to the insurer’s ecosystem, ensuring faster deployment, enhanced agility, and superior customer experiences.
• Scalability and Agility:
  The solution grows with your business, helping insurers adapt quickly to new regulations, market shifts, and customer demands.

With Newgen, life insurers can now integrate health insurance capabilities without replacing their existing infrastructure, expanding services faster and more efficiently.

The Road Ahead: From Fragmented to Future-Ready Insurance

The introduction of composite licensing marks a historic shift in India’s insurance landscape. By enabling insurers to unify their operations, the framework encourages innovation, customer-centricity, and financial inclusion.

While challenges around integration, compliance, and competition remain, digital transformation will be the key differentiator. Insurers that modernize now will not only meet regulatory mandates but also gain an enduring edge in agility, speed, and customer trust.

Start Your Composite Insurance Journey

Composite insurance isn’t just about convergence, it’s about creating a more connected, intelligent, and inclusive insurance ecosystem.