Artificial intelligence could play an increasingly important role in the next phase of growth for India’s insurance industry, particularly in customer discovery, distribution and underwriting.
A September 23, 2026 report by McKinsey said insurers may need to move beyond traditional distribution models and make greater use of AI, digital platforms and ecosystem partnerships to expand insurance access and improve customer engagement. The report noted that insurance adoption in India has not kept pace with broader growth in financial services, highlighting the need for more relevant products, effective distribution, affordability and customer trust.
Insurance Distribution Is Moving Beyond Traditional Models
McKinsey said insurers are reassessing conventional direct-to-customer approaches as consumers increasingly use digital and AI-powered interfaces to discover and evaluate products.
Traditional customer acquisition has relied heavily on aggregators and paid channels, which can increase acquisition costs and limit an insurer’s direct relationship with customers. AI-led discovery could change this process by helping customers find, compare and engage with insurance products through digital platforms.
The report also points to the potential development of agentic AI-led customer journeys. Such systems could eventually support several stages of the process, including product discovery, engagement, conversion and cross-selling across an insurer’s own platforms and partner ecosystems.
Ecosystem Partnerships and Rural Insurance
Ecosystem partnerships are also becoming an important part of the distribution discussion. Insurers can use such platforms not only to reach new customers but also to maintain ongoing engagement and strengthen relationships with policyholders.
Expanding insurance coverage in Tier-3 cities and rural areas remains another challenge. McKinsey noted that lower penetration in these markets is not simply a matter of distribution reach. Existing products and customer journeys may not always match the requirements of underserved consumers.
Products, onboarding processes and engagement models designed primarily around urban customers can be complex or costly for smaller towns and rural markets. The report highlights efforts by insurers to redesign products and distribution approaches to improve accessibility, affordability and customer trust in these areas.
AI Could Transform Insurance Underwriting
Underwriting is another area where AI could significantly change how insurers operate. McKinsey identified opportunities to connect customer information collection, data enrichment, risk assessment, pricing, approvals, quotation and policy issuance within AI-enabled workflows.
Such systems could automate routine processes while allowing underwriters to devote more time to activities that require human judgment, including customer and broker interactions, handling exceptions and portfolio management.
The broader McKinsey report also identifies manual processes, fragmented data and workflow limitations as challenges across insurance operations. AI could potentially help insurers automate routine tasks and improve decision-making across areas such as distribution, underwriting, claims and customer service.
Regulatory Changes Could Influence the Next Phase
The technology shift comes alongside changes in India’s insurance regulatory environment. The broader direction of regulation is placing greater emphasis on customer protection, distribution standards and more transparent customer journeys.
McKinsey’s latest assessment suggests that insurers will need to combine technology adoption with changes in operating models rather than treating AI simply as a standalone technology project. The report highlights workflow transformation, business ownership, selective use of the AI ecosystem and faster experimentation as areas insurers can consider while scaling AI.
For India’s insurance sector, the combination of AI, digital infrastructure, evolving distribution channels and regulatory developments could therefore shape how insurers reach customers, assess risk and manage relationships in the years ahead.
Disclaimer: This article is based on information and analysis published by McKinsey and is intended for general informational purposes. The views and potential developments described do not guarantee how the insurance industry will evolve. Readers should refer to official regulatory documents and authoritative sources for the latest information on insurance rules, products and policies.