India wants Insurance for All by 2047. It is an important ambition.
But I believe we need to ask a more fundamental question.
Are we trying to insure more people, or protect them better?
The two are connected. They are not the same.
Consider three situations.
A family has life insurance. The breadwinner dies, the claim is settled, but the money barely covers a few months of household expenses.
A small manufacturer has fire insurance. A fire damages the factory, the insurer settles the claim according to the policy, but the owner still cannot afford to restart production.
A patient has health insurance. The hospital bill is ₹5 lakh, yet the family must arrange a substantial amount from its own savings because of limits and exclusions.
In all three situations, insurance exists. In some cases, the insurer has fulfilled its contractual obligation.
But has the customer received enough financial protection?
That is the question we are not measuring adequately.
We count premiums. What about protection?
India's insurance industry issued 41.84 crore policies and collected ₹11.93 lakh crore in premiums during FY2024–25.
Insurance penetration stood at 3.7% of GDP, while insurance density was US$97 per person.
These are important indicators. They tell us the size of the insurance market and how much India spends on insurance.
But they cannot tell us whether a family has enough life cover, whether a business can survive a fire or whether insurance prevents a medical emergency from becoming a financial crisis.
Even 41.84 crore policies do not mean 41.84 crore different people are protected. One customer can hold several policies, while another may have none.
A policy is a contract. Protection is the financial security that contract actually provides.
We need to start measuring both.
Health insurance shows why this matters
In FY2024–25, health insurance premiums grew by approximately 9%, reaching ₹1,17,505 crore.
The number of covered lives increased by only about 2%, from roughly 57 crore to 58 crore.
This does not automatically mean customers received less protection. Higher premiums may reflect rising medical costs, larger sums insured, ageing policyholders or improved benefits.
But it raises a question worth answering.
Are people paying more because they are receiving better protection, or because insurance is becoming more expensive?
The claims data raises another issue.
During FY2024–25, general and standalone health insurers paid 87.5% of reported claims by number, while the amount paid represented approximately 71.1% of the total amount claimed.
These figures must be interpreted carefully.
The amount ratio includes claims pending at year-end and amounts disallowed under policy terms. It does not mean that insurers paid only 71.1% of every legitimate hospital bill.
The missing information is different.
After insurance pays, how much does the patient still pay?
How much is deducted because of room-rent limits, co-payments, exclusions, non-medical expenses or deductibles?
That is what a family experiences. And that is what financial protection should measure.
A claim can be settled correctly and still leave a family exposed
Take a household that needs ₹60,000 every month to maintain its living expenses.
If the breadwinner dies, the family would require ₹72 lakh to meet those expenses for ten years, ignoring inflation, debts and investment returns.
Now imagine the family receives ₹2 lakh from a life insurance policy.
The claim may be paid in full and on time. Yet the payout covers less than 3% of the illustrative ten-year income requirement.
There is no failure of claim settlement here.
There is a failure of coverage adequacy.
This distinction matters just as much for small businesses.
Consider an MSME factory with assets worth ₹1 crore but insured for only ₹25 lakh.
A fire causes ₹20 lakh of insured property damage. Depending on the applicable policy wording, valuation and underinsurance provisions, the claim payment may be reduced substantially. Under a straightforward proportional-average illustration, it could be approximately ₹5 lakh before deductions.
Even that does not address lost production, wages, rent or loan instalments during the shutdown unless suitable business interruption protection exists.
The insurer may have settled the claim correctly.
The business may still be unable to reopen.
A claim settled is not necessarily a business restored.
Even compulsory insurance does not guarantee protection
Motor third-party insurance is mandatory in India.
Yet the Supreme Court, in its judgment of 4 August 2026, cited government data showing approximately 16.54 crore uninsured vehicles out of 30.48 crore.
The underlying figures were historical and excluded certain states. They should not be represented as a fresh 2026 count.
Nevertheless, the scale of the compliance gap is concerning.
The real policy question is not simply how many motor insurance policies insurers sell.
It is what proportion of vehicles actually being used on Indian roads have valid third-party insurance, and whether accident victims receive compensation without unnecessary delay.
Once again, the difference is between insurance activity and effective protection.
What other countries are beginning to measure
India is not alone in confronting this question.
In the United Kingdom, the Financial Conduct Authority publishes measures including claims acceptance, average payouts, complaints and claims costs relative to premiums. These help identify differences in customer outcomes across products and insurers.
In the United States, insurance regulators are examining homeowners' insurance renewals, cancellations, premiums and claims. A customer who cannot renew an essential policy is exposed even if insurance was available the previous year.
Australia is studying the financial consequences of uninsured natural disasters. Its prudential regulator estimates that around one in seven households in freestanding homes may currently lack home insurance.
The European insurance regulator has also warned about the insurance illusion: customers believing they are protected against risks that their policies do not actually cover.
These countries use different approaches. There is no single global measure of insurance quality.
But the direction is clear.
Insurance markets need to understand what customers receive, not only what they purchase.
India already publishes important claims, coverage and persistency information. The opportunity is to connect these measures to the actual risks people and businesses face.
My proposal: An Effective Insurance Protection Dashboard
I would propose that IRDAI publish an annual Effective Insurance Protection Dashboard, alongside the familiar measures of penetration and density.
Not another complicated index or a national score out of 100.
Just three questions, measured separately for life, health, motor, agriculture and MSME insurance.
1. Are you covered today?
How many eligible people, families, businesses or vehicles actually have valid insurance today?
Not cumulative enrolments. Not policies sold over several years.
Active protection.
For government-supported insurance programmes, this would distinguish people who were once enrolled from those whose cover remains available.
2. Are you covered enough?
Does the amount and scope of insurance reasonably match the risk?
For life insurance, compare cover with household income needs and liabilities.
For health insurance, compare cover with regional treatment costs and policy limitations.
For MSMEs, compare insured values with replacement costs and examine business interruption protection.
Adequacy cannot be measured by one universal benchmark. Every risk requires its own assessment.
3. Does your insurance pay properly and on time?
When a valid claim arises, does the customer receive the amount contractually payable, without unnecessary delay?
How long does settlement take?
How much of the eligible loss is paid?
What happens when there is a dispute?
And, where practical to measure, how much of the financial loss remains with the customer?
The objective is not to make insurers pay beyond their contractual obligations. It is to establish whether those obligations provide meaningful protection and are fulfilled when needed.
The government must measure outcomes too
This is particularly relevant as states consider premium subsidies and insurance support for MSMEs.
A government may subsidise thousands of policies and report significant enrolment.
But what happens the following year?
Are those businesses still insured? Were the sums insured adequate? Can they afford renewal after the subsidy? Did insurance actually help those experiencing a fire, flood or other covered loss?
For a state programme such as Bihar's, I would start with a small pilot covering two districts or industrial clusters.
Measure active insurance, adequacy, renewals, claims performance and the affordability of cover after subsidy.
Establish the baseline first. Set targets after understanding the gaps.
Public money should be judged by the protection it sustains, not merely the policies it helps sell.
Insurance distribution must also be judged differently
IRDAI's September 2026 consultation on the economics of insurance distribution has brought commissions and distribution costs into focus.
The debate is necessary. But reducing distribution costs cannot be the only measure of success.
An insurance agent or broker who correctly identifies a customer's risk, arranges suitable cover, supports renewal and helps during claims delivers a service that matters.
A cheaper channel that produces poorly understood policies, inadequate cover or high lapses may prove more expensive for the customer.
The test should be the lasting protection delivered relative to the total cost of acquisition and service.
That means evaluating intermediaries through persistency, suitability, complaints and claims assistance, not premium production alone.
Good distribution deserves to be recognised. Poor distribution deserves to be challenged.
And this measurement should apply to every channel, including insurance brokers.
Where should India begin?
We need not wait for an entirely new regulatory system.
IRDAI already collects substantial information. The Insurance Information Bureau, government scheme databases and claims records offer a starting point.
The first stage can use existing aggregate data.
The next stage should establish reliable counts of unique insured people and businesses, examine coverage adequacy and track protection over successive renewals.
More detailed analysis would require appropriate data-sharing authority, privacy safeguards and independent evaluation.
The dashboard must also be commercially sensible. Insurance pricing, insurer solvency and the affordability of renewal remain essential. Better measurement should encourage better protection, not simply more expensive policies.
And it must be useful enough for a policymaker, insurer, broker or ordinary customer to understand.
From Insurance for All to Protection That Works
India needs more insurance. There is no disagreement on that.
We need more families protecting their income, more businesses protecting their assets and livelihoods, more farmers protecting their crops, and more vehicles complying with compulsory insurance.
But we must stop treating insurance sales as sufficient evidence of financial security.
Premium growth tells us how the industry is expanding.
Active coverage tells us who is protected.
Coverage adequacy tells us whether the protection is sufficient.
Claims delivery tells us whether the promise works when it is tested.
That is the purpose of the proposed Effective Insurance Protection Dashboard.
A policy sold is not necessarily a family protected.
A claim settled is not necessarily a business restored.
India has built an insurance growth scoreboard.
It is time to build a protection scoreboard alongside it.
Research and Sources
This article is adapted from India Counts Insurance Policies. Does It Count Protection? Beyond Insurance Penetration, an Insuring Bharat research report dated 30 October 2026.
Data periods vary by indicator. Financial examples are illustrative, and actual insurance payments depend on policy terms and the circumstances of each claim. The dashboard is an Insuring Bharat policy proposal, not an existing regulatory requirement.