From complexity to clarity: How AI is transforming insurance for customers

Over the past few decades, the insurance industry has evolved steadily alongside technology. From paper-based proposals and branch interactions to call centres and digital platforms, each phase reflects changing customer expectations.

What we are witnessing today, however, is not just another step in digitisation. It is a fundamental shift in how customers understand, evaluate, and experience insurance.

A large majority of insurance journeys today begin online. Industry estimates and regulatory insights suggest that over 70% of customers now start their search digitally, a sharp increase over the past decade.

As highlighted in multiple industry analyses and digital adoption studies, this shift reflects not just increased internet penetration, but a bigger behavioural change in how customers approach financial decisions.

At the centre of this transformation is Artificial Intelligence, which is not just improving processes but reshaping the entire customer experience.

Insurance has traditionally been perceived as complex. For most customers, understanding policies meant going through multiple documents, comparing fine print, and relying heavily on intermediaries to interpret technical details.
Even for well-informed customers, navigating different websites, product brochures, and policy wordings could be overwhelming. AI is changing this in a very fundamental way. It is turning what used to be a search-driven process into a conversation.Today, a customer does not have to browse through multiple pages or interpret complex documents to understand insurance. They can simply ask questions in plain language and receive clear, contextual, and relevant responses instantly.

Whether it is understanding what a policy covers, comparing two products, checking waiting periods, or evaluating claim-related aspects, AI is making this information available in a far more intuitive manner. This shift is significant.

According to industry estimates, AI-driven recommendation engines and assisted journeys have the potential to reduce decision-making time by as much as 60-70%. Instead of spending hours navigating information, customers can now arrive at informed decisions within minutes.

The interaction becomes natural and personalised, almost like speaking to a knowledgeable advisor who is always available. What makes this even more powerful is that the responses are not generic. They are tailored to the customer’s specific needs, helping them focus on what truly matters rather than getting lost in excessive information.

This ability to simplify comparisons is one of the most important contributions of AI.

Insurance decisions are rarely about price alone. They involve understanding coverage, service quality, network strength, and long-term reliability. AI helps bring all these factors together in a way that is easy to understand and act upon.

Beyond discovery and comparison, AI is also enhancing the overall customer experience. AI powered assistants today can handle a significant share of routine queries. Various industry studies suggest that AI led bots can manage up to 60-80% of standard customer interactions, enabling round the clock support and faster resolution times.

Processes such as onboarding and policy issuance are also becoming faster and more seamless. Activities like document verification and policy issuance, which earlier took days, are now completed within minutes through automation and digital integration. This improvement in speed and simplicity directly contributes to greater customer confidence.

The impact of AI becomes even more meaningful when we look at India beyond the large urban centres. For customers in Tier 2 and Tier 3 cities, access to insurance has often been limited by a combination of awareness, complexity, and availability of guidance. At the same time, these markets are driving the next wave of digital growth.

According to industry reports and insurer data, over 50% of new digital insurance customers are now coming from Tier 2 and Tier 3 locations. AI has the potential to act as a powerful bridge in this context. Through voice-based interactions, regional language capabilities, and simplified interfaces, AI enables customers to engage with insurance in a way that is comfortable and familiar.

A customer does not need to be financially sophisticated or digitally advanced to ask a question and understand the answer. This is where AI can play a transformative role in reducing the digital divide. It removes the need for customers to navigate complex systems or rely solely on physical access points. Instead, it brings information, guidance, and support directly to them in a simple and accessible format.

India’s insurance penetration continues to remain below global averages. According to the data from the Government of India and IRDAI, insurance penetration stands at around 3.7% of GDP, compared to significantly higher global benchmarks.

This highlights the scale of the opportunity as well as the need to expand access and awareness. Bridging this gap requires not just more products or distribution, but simpler and more intuitive ways for customers to understand and trust what they are buying. AI is uniquely positioned to support this transition.

Looking ahead, the role of AI will continue to deepen. Insurance will become more intuitive, more personalised, and more responsive to individual needs. Customers will not just seek information, but expect guidance that is relevant, timely, and easy to act upon.

For a country as large and diverse as India, the ambition of Insurance for All will require scale, innovation, and collaboration across the ecosystem. Technology, and particularly AI, will be an important enabler in making this vision a reality. This is not just about adopting new tools. It is about reimagining how the industry connects with customers.

From selling policies to building confidence, from transactions to relationships, and from complexity to clarity, the shift is already underway. In many ways, AI is helping the industry deliver on its most important promise. To make insurance simple, understandable, and accessible for every Indian.

(The author Dr. Tapan Singhel, MD & CEO, Bajaj General Insurance Limited (formerly known as Bajaj Allianz General Insurance Company Limited)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)