India’s insurance regulator (IRDAI) and the government are actively considering composite or unified licensing, which would allow one insurer to underwrite life, health, and general insurance under a single entity. Currently, separate licenses apply to life insurers and general (non-life) insurers. Life insurers cannot sell health or non-life products, while general insurers sell everything else.

The proposed change follows global trends in markets like Singapore and Malaysia, and is aimed at boosting insurance penetration (3.8% of GDP in 2023). In mature markets with composite licenses, such as Singapore, integrated players have deployed innovative, customer‑centric products- for example, apps embedding life, accident, and critical-illness cover into everyday activities.

Analyses by Bain and others note that composite licensing can streamline costs and compliance, enable new bundled offerings, and leverage wider distribution networks. However, it also raises challenges in capital adequacy, actuarial complexity, and governance across disparate lines.

This white paper reviews global case studies (UK, Singapore, Australia), compares them to India’s law, and outlines the benefits- operational efficiency, cross-selling, product innovation versus challenges- solvency norms, risk segregation, regulatory change. It also models potential five‑year scenarios such as broader product portfolios, tech integration, and suggests actions for policymakers, insurers, and tech partners.

The Indian insurance sector is at a regulatory inflection point. To Insure India by 2047, IRDAI is liberalizing rules, including open architecture distribution, use-and-file product filings, and reduction of commission caps. In Budget 2025, the Finance Minister announced 100 percent foreign direct investment (FDI) and proposed composite licensing for life and non-life under one license. In November 2024, Reuters reported that the government plans amendments to the Insurance Act (1938) to permit a unified license, recognizing that currently, life companies cannot sell health products. A parliamentary committee likewise urged composite licences, noting they “can cut costs and compliance hassles” and allow all-in-one policies with lower premiums for consumers.

Globally, regulators are also evolving. Mature markets have moved to risk-based capital (RBC) frameworks, IFRS 17 accounting, and support digital innovations such as fintech sandboxes and insurtech ecosystems. The UK has largely separated life and general lines, and no new composite licenses are granted. By contrast, Singapore, Malaysia, and some European countries allow composite insurers under a unified capital regime. This paper benchmarks these models (UK, Singapore, Australia), contrasts India’s current licensing and proposed changes, and analyzes the strategic opportunity of a composite regime – from operational synergies to customer value – against the technical challenges of implementation.

United Kingdom – Separate Lines Under Prudential Regulation

In the United Kingdom, composite insurance licenses are no longer issued. Most UK insurers are authorized for either long-term (life) business or general (non-life) business, but not both. A few legacy composite companies like Aviva, which contain both life and general operations, still exist, but regulators generally treat life and non-life divisions distinctly under the Prudential Regulation Authority (PRA) and FCA. HMRC notes “there are a small number of ‘composite’ insurers but such composite licences are no longer granted”. Solvency and capital rules (the Solvency II regime) apply on a consolidated basis for groups, but UK law does not facilitate issuing new unified licenses. The impact is a highly specialized industry: life insurers focus on term, savings, and annuity products, while general insurers focus on property, motor, health, and casualty lines. No single-entity bundling is typically permitted, so cross-selling requires separate entities or reinsurances.

Singapore – Direct Composite Insurers with Flexible Innovation

Singapore explicitly allows direct composite insurers. Under the Monetary Authority of Singapore (MAS) regulation, insurers may be licensed as Direct Life, Direct General, or Direct Composite, enabling them to write both life and general lines. MAS enforces risk-based capital via Notice 133 and IFRS 17 disclosures, but composite firms such as Income Insurance and Great Eastern operate full life-health-general portfolios under one roof. Singapore’s ecosystem emphasizes innovation and tech. MAS offers regulatory sandboxes and innovation grants. For example, Singapore’s Income Insurance, a composite insurer, partnered with fintech ZhongAn’s tech arm to launch SNACK, a mobile micro‑insurance app embedding life, personal accident, and critical-illness cover into daily activities. The unified structure enabled seamless cross-line underwriting and digital product bundling. As Chambers notes, MAS has tailored its rules to allow composite businesses and encourage fintech experimentation, for example, SGD150m tech grants.

Singapore’s experience highlights governance and solvency frameworks for composites. The Insurance Act (1966) defines insurer classes and allows composite licenses. Solvency rules under MAS’s RBC Notice treat composite entities much like others, but require comprehensive capital buffers for combined risk. MAS also has clear corporate governance standards (audit committees, risk committees, fit-and-proper directors) for all insurers. Product innovation has been robust: beyond SNACK, Singapore has integrated travel-health insurances like Zurich/Klook’s Traveljoy and fully digital quoting integrations such as Etiqa/Surer collaboration for motor insurance.

Australia – Separate Insurers with Coordinated Holding Structures

Australia does not issue single composite licenses. Life insurers are authorized under the Life Insurance Act (LAGIC), and general insurers under the Insurance Act. Each line requires separate APRA authorization and capital standards (LAGIC for life, APRA insurance standards for general). APRA’s approach has been to allow integrated groups via holding companies. For instance, in Nov 2024, APRA approved St Andrew’s Australia Services as a non-operating holding company to own both Hallmark Life and Hallmark General. APRA thus requires distinct subsidiaries for each line, but permits a unified parent to manage them under one regulatory group. Under APRA’s prudential standards (LAGIC for life; GPSS/PSPS for general), each insurer maintains its capital, but a parent can coordinate risk management.

Australia’s capital regime is also risk-based: new standards LAGIC (for life) and GPSS/GIAC (for general) impose solvency buffers related to risks. Composite insurers, per se, aren’t defined, but APRA allows double-licensing via corporate groups (a holding company). Consumer benefits in Australia from such structures include bundled product offerings marketed by groups (e.g., one group offering both life and car insurance through aligned channels), but legally, products are issued by separate companies. In summary, Australia’s model suggests how composite-like advantages can be achieved via corporate structure without changing core licensing laws, though India’s move would go further by unifying licenses within one entity.

Comparison: Indian Licensing vs. Global Models

Under current Indian law, life insurance business (including pension, annuities) and general insurance business (including health, motor, property) require separate IRDAI licenses. No insurer may write both under one license. Life insurers (e.g., LIC, private life companies) cannot sell non-life products like health or auto; general insurers cannot offer life-saving/annuity products. The 1938 Act and IRDAI regulations explicitly prohibit composite operations. Agents are also licensed for either life or general lines, so cross-selling is limited.

By contrast, Singapore’s law explicitly provides for composite insurers, and countries like Malaysia do likewise (composite licences for both insurance and takaful). Australia’s regulations separate lines but allow group integration, as noted. Only specialized jurisdictions, such as some U.S. states, allow a “broad” insurer license; most require at least separate statutory identities.

The proposed Indian reforms aim to align with the more permissive models. The government’s November 2024 amendment bill would allow insurers to offer life, general, and health insurance under one single registration. If passed, India’s licensing regime would change to resemble Singapore’s (one entity, multiple classes) or Europe’s Solvency II (where group entities can combine lines) rather than the UK/Australia old model.

Regulatory reports and industry analyses highlight several potential upsides of a unified license in India:

• Operational Efficiency and Cost Savings: A single insurer can consolidate functions (actuarial, IT, compliance, finance). The Indian parliamentary finance panel noted that composite licensing “can cut costs and compliance hassles” by letting an insurer “run different lines under one roof”. PwC India similarly observes that a composite licence “could streamline costs, and increase operational efficiency while simplifying compliance”. For example, integrated IT systems can replace duplicate policy admin platforms; one customer-service team can handle cross-line claims. Combined corporate functions (accounting, audit, risk) reduce overhead. Lower compliance burden (one set of audits/supervision instead of two) and unified reporting could yield significant OPEX savings (some analysts estimate double-digit percentage cuts in combined expense ratios).
• Cross-selling and Distribution Synergies: India’s life and health markets use separate agency and bancassurance channels. A composite insurer can train a unified sales force to cross-sell across product lines. For instance, a life insurer’s 2–3 million agents (agents, bancassurance reach) could now also market health or motor insurance, greatly expanding general coverage. Bain notes large life insurers acquiring standalone health companies (SAHIs) to leverage their deep distribution. Banks and brokers would likewise benefit: one relationship yields multiple products. Globally, this is a proven strategy – Singapore’s AIA, Great Eastern, and Malaysia’s AIA-Malaysia all leveraged cross-selling by holding life and general insurance. Bundling improves customer retention as well; a family with both life and health policies from one insurer benefits.
• Customer-Centric Products and Innovation: Unified licensing allows novel product design. The finance panel highlights that consumers could get “a single policy that covers life, health, and savings,” such as a life annuity with integrated health coverage. Composite insurers worldwide have created packaged products- for example, travel policies combining accident, health, micro-insurance covering multiple risks. Singapore’s Income Insurance’s SNACK micro‑insurance app is one such innovation. In India, a composite license would encourage similar bundling: think of an affordable “family protection plan” covering life, accidental death, and critical illness under one contract, or small-business packages covering fire, liability, and key-person life cover. Such flexibility can make insurance more appealing to customers.
• Expanded Market Reach and Penetration: By lowering barriers between lines, composite licensing is expected to boost overall insurance uptake. Reuters notes that a unified license could “improve insurance penetration in the country”. Given India’s low insurance density (~10% of the global average), even small percentage gains in penetration represent huge new premium volumes. For example, increasing total penetration from ~3.8% to 5.0% of GDP would roughly double the insurance market over time. While driven by multiple factors, unified licensing is seen as a catalyst to accelerate this growth.
• Enhanced Competition and Foreign Participation: Allowing composite licenses (along with 100 percent FDI) makes India’s market more attractive to global insurers who operate under unified models. As one analysis notes, this reform would “align with best practices in mature insurance markets” and is expected to “enable insurers to diversify their portfolios and adapt to varied markets”. Composite licenses would let multinational companies use proven global products locally, increasing innovation and competition.

Overall, proponents argue that composite licensing leads to “more comprehensive insurance options and lower premiums for consumers” due to the combined scale and efficiency. It also incentivizes investment in customer engagement, such as omnichannel platforms. For distributors (agents, brokers), the expanded product range means greater customer loyalty and improved economics.

Despite the upside, moving to composite licensing poses significant challenges:

• Solvency and Capital Adequacy: IRDAI will need to establish how a composite insurer meets capital requirements. Currently, insurers must maintain a Solvency Ratio ≥ 150 percent of the required capital for each line. Under a unified model, regulations must ensure the firm holds enough capital against combined risks (mortality, morbidity, property, liability, etc.). Lawmakers have emphasized “adequate capital and solvency requirements”. India may need to revise its capital framework, perhaps accelerating an RBC2 or “Target Capital Model”, to account for diversification effects across life and non‑life. For example, a composite insurer might benefit from risk diversification as life and motor risks are uncorrelated, which could reduce aggregate capital needs if properly modeled. But regulators must guard against cross-subsidization; clear rules are needed to ring-fence statutory funds or demand extra capital in volatile segments such as health claims or catastrophe exposures.
• Risk Segmentation and Governance: A unified license raises questions on risk management and corporate governance. Should IRDAI require separate “cells” or subsidiaries for different lines to protect policyholders? Which board or committees oversee multi-line books? New governance standards, such as a group-level Chief Risk Officer and integrated actuarial oversight, will be critical. Actuarial functions will also become more complex: pricing must account for product interactions, for example, a life insurer offering critical-illness riders. Operationally, claims and underwriting teams must be trained across different lines. The parliamentary panel noted that current laws (LIC Act, GIBNA) explicitly forbid public insurers from composite operations unless amended, indicating the legal groundwork needed.
• Regulatory Complexity and Transition: Introducing composite licences requires legislative amendments (Insurance Act, 1938, and possibly IRDAI Act, 1999). The Finance Act and Budget amendments of 2025 provide for it, but the IRDAI and government must define transitional rules. For instance, will existing life insurers be grandfathered? (Likely yes.) How will existing certificates of deposits – referred to as “insurers’ pollutions” be merged? Public sector insurers (LIC, GIC/PSUs) may need special treatment: The Indian Express notes that PSUs will require changes to their founding laws (LIC Act 1956, GIBNA 1972) to allow composite business. Without parallel amendments, PSUs could be disadvantaged as only private firms would get composite status.
• Actuarial and Pricing Complexity: Life insurance actuaries and non-life actuaries use different models. A composite insurer will need integrated actuarial teams and possibly higher skill requirements to price both annuities and indemnities. The firm must manage liquidity differently: life insurers traditionally invest in long-duration bonds, while general insurers keep more liquid assets for short-term claims. Investment and asset-liability strategies will need harmonization. Reinsurance arrangements will also be multi-line, for example, a portion of life in a life pool and general in a general pool.
• Data and Technology Integration: Merging product lines demands integrated IT systems, including policy admin, claims, and CRM platforms. Legacy insurers will need significant tech upgrades. Operational data streams must feed into unified analytics and risk systems. Achieving this will require investment; in the short term, composites might see higher IT spend. Conversely, digital-ready newcomers (InsurTechs) may find composite licensing an opportunity. India’s IRDAI is already encouraging tech through regulatory sandboxes and e-governance to smooth this transition. For example, Singapore’s experience shows that regulatory sandboxes and innovation grants can help composite insurers roll out digital offerings, such as MAS’s fintech grants of up to SGD 400K for prototypes.
• Competition and Market Structure: Composite licensing could intensify competition between players. Smaller standalone insurers may face pressure to merge or stay niche. The sector may see consolidation, such as life-gen insurers merging. Policymakers must consider whether measures, such as competition safeguards, are needed. The parliamentary committee urged IRDAI to study the market impact closely by forming a working group.

In summary, composite licensing promises efficiency and innovation but requires careful regulatory design. Robust capital norms, clear segment controls, and stakeholder consultation are essential to managing the associated risks.

Scenario – “Unified Growth” (with Composite Licenses): Within five years of implementation, several outcomes could emerge. Insurers consolidate operations; major life insurers may combine with general or health subsidiaries, for example, through mergers or converting group structures into single companies. Distribution will blur: an agent may present a package of life plus health products in one pitch. Technology will play a vital role: firms will invest in integrated policy admin systems, mobile apps for omnichannel customer journeys, and data analytics to personalize multi-line bundles. Emerging digital tools such as AI chatbots, telematics-based underwriting, health monitors, and e-pharmacy tie-ups could be deployed more holistically. For example, as one industry study notes, global pilots are using generative AI to assist agents by summarizing customer conversations and recommending next offers, a capability magnified by composite product portfolios.

On capital and solvency, regulators may overhaul the framework. India could adopt a risk-based capital (RBC2) or Target Capital Model, akin to Solvency II; this would account for diversification across lines, perhaps lowering total capital requirements while still protecting policyholders. For illustration, if life and non-life risks are largely uncorrelated, a composite insurer might need less capital than the sum of separate buffers, freeing up funds for investment or innovation. IRDAI might phase this, as proposed by various committees, and require phased reinsurance or capital during transition.

Penetration and financial impact forecasts (illustrative): If composites raise efficiency and cross-sell success, penetration could climb. Current insurance penetration (~3.8% of GDP) might feasibly rise to 4.5–5% within 5 years under optimistic scenarios. This implies significantly higher premium volumes: e.g., Indian GDP ~USD3.8T, so 1% GDP ~USD38B in insurance premiums. Even a 1% boost adds tens of billions of dollars in premiums over half a decade. Overhead-cost reductions, say 10–15% lower combined expense ratios due to unified operations. would improve underwriting profitability. Moreover, integrated insurers could cross-subsidize new product lines, such as a profitable life insurer bankrolling a new health venture until it scales.

Scenario – “Status Quo”: If composite licensing stalls, India’s insurance sector grows more slowly. Life and non-life firms remain siloed; banks and agents continue limited bundling. Penetration might inch up only via incremental reforms such as wider agent access or modest product innovation. Digital insurtech could still drive some growth, but without the structural lift composite licensing provides.

5-Year Indicators: In the composite scenario, by 2030, we might see: 3–5 large “unified” insurers such as ex-life majors plus ex-general majors competing across lines; doubled distribution capability for life and health products; new hybrid products such as life annuity with embedded health cover, SME business packages combining liability, health, and life benefits.; updated IRDAI capital norms explicitly for composites; lower operating ratios across the industry; and policy coverage penetration measurably higher (data-driven proof of increased inclusion). Technology ecosystems, such as InsurTech startups focusing on multi-line platforms, would mature. Capital adequacy models could allow intra-group capital transfers within calibrated limits, and reinsurance markets might adapt by offering hybrid treaties.

Table 1: Country Licensing Frameworks (Comparison)

Table 2: Strategic Benefits vs. Challenges of Composite Licensing

(Illustrative scenario forecast: In a unified-license scenario, India’s insurance penetration could potentially rise toward 5% of GDP over 5 years (from 3.8% today), driven by bundled products and broader access. Combined operating expenses might fall by 10–15% due to synergies. These forecasts are illustrative.)

• To Policymakers/Regulators: Expedite enactment of composite licensing with clear guidelines. Amend legacy laws (LIC Act, GIBNA) so PSUs can benefit, ensuring a level playing field. Establish robust capital frameworks (RBC2/TCM) reflecting diversified risks. Consider interim measures such as allowing composite by group structure or separate statutory funds during transition. Engage insurers and consumer groups via IRDAI working groups to fine-tune product and solvency rules. Coordinate with GST and tax authorities to ensure bundled products have fair tax treatment; the panel also recommended rationalizing GST on insurance for affordability, which would complement composite offerings.
• To Insurers: Begin planning integration. Invest in flexible IT systems that can handle multi-line products. Train actuarial and underwriting teams in cross-line expertise. Pilots can test bundled policies in a regulatory sandbox environment. Review corporate structure, such as mergers, holding company formation, to align with the new license model. Cultivate data analytics and digital marketing capabilities, including mobile apps and telematics, to leverage your combined customer base. Protect capital positions by stress-testing combined-life-and-nonlife scenarios. Partner with banks, brokers, and tech firms early to design omnichannel delivery of new insurance bundles. For legacy PSUs, actively engage with the government and IRDAI on how to structure composite participation.
• To Technology and Service Partners: Prepare platforms that support composite operations such as unified policy administration and claims management systems. Develop end-to-end solutions like CRM, data lakes, and AI analytics for multi-product insurers. As B2B partners, offer training and compliance tools to help insurers meet new governance standards. Support agents with AI-driven sales tools (e.g., the generative-AI sales assistants Bain mentions). Insurtechs should explore opportunities for creating “insurer-of-influencer” models or embedded insurance combining life and property/casualty lines, leveraging expanded regulatory scope.

Allowing composite insurance licenses in India aligns with global best practices and the nation’s development goals. It promises greater efficiency, innovation, and customer-centricity by enabling insurers to offer one-stop protection solutions and optimize their operations. Singapore’s composite insurers and Australian holding companies demonstrate how unified models can power product innovation and market expansion. However, success hinges on thoughtful regulation: prudent capital rules, clear risk segregation, and robust governance must accompany the new license. By preparing now – drafting amendments, engaging stakeholders, and upgrading technology – India can realize the strategic benefits of composite licensing. Ultimately, this reform could accelerate insurance penetration, making protection more accessible and affordable for all Indians, while keeping the industry financially sound.

• India plans insurance law changes for unified license, hiking FDI limit, sources say | Reuters
• Parliament panel proposes composite license for insurers, cut in GST rates | Business News - The Indian Express
• Unlocking growth opportunities in India’s insurance sector
• India’s Insurance Industry Transformation | Bain & Company
• wongpartnership.com
• Licensing guidelines for general insurers | APRA
• APRA greenlights new holding company for life and general insurance | Insurance Business Australia