India's insurance sector can cut mis-selling and improve compliance by deploying agentic artificial intelligence across the value chain, according to Saurabh Bhattacharya, Additional Executive Director at the Centre for Smart Governance (CSG), Karnataka. His comments, made at the BW Festival of Fintech 2026 in New Delhi, come as insurers face mounting regulatory pressure and customer expectations shaped by digital experiences outside the industry.
Insurance penetration and economic risk-taking
Bhattacharya said the government-backed CSG has been working with public sector bodies on digital governance and is now contributing to work around the insurance regulatory ecosystem. The organization has examined how AI can transform insurance processes while keeping human oversight in critical decisions. India's insurance penetration remains well below the global average, and Bhattacharya argued that expanding coverage supports long-term economic growth by giving individuals a financial safety net.
"If you are insured, your health is insured, you know that your financial liabilities are covered. I'm more comfortable taking that risk," he said.
Rethinking compliance with AI agents
The insurance ecosystem has grown more complex, involving insurers, brokers, agents, third-party administrators, hospitals, and surveyors. At the same time, emerging risks from climate losses, cyberattacks, and financial fraud have raised regulatory expectations. Much of the industry's manual work - document verification, underwriting support, claims assessment - can be delegated to AI agents that analyze structured and unstructured data, Bhattacharya said. He stressed that AI should augment, not replace, human professionals.
"AI is not replacement. We don't look at it as a replacement, but we see it as an augmenting force. At the top still remains that one ultimate thing, which is the human judgement," he said.
Deploying AI for Insurance tasks such as identity verification, Know Your Customer (KYC) and anti-money laundering checks, medical record analysis where permitted, and fraud indicator detection can reduce processing time while improving consistency, he added. AI agents could also prepare claims settlement recommendations, leaving final decisions to human professionals.
Customer pressure and mis-selling
Policyholders now compare insurance services against the best digital experiences they receive anywhere, not just within the sector. Faster service, intuitive digital interfaces, and quicker claims resolution have become standard expectations, Bhattacharya said. Analysis of complaints submitted through the Bima Bharosa grievance portal shows that mis-selling remains one of the most significant issues reported. AI-driven product suitability assessments could help match policies more closely with customer needs, reducing inappropriate sales.
Bhattacharya also said AI can shift regulatory compliance from periodic, retrospective reviews to continuous transaction-level verification. "Compliance has to happen not in a retrospective manner, but in a prospective manner. We are looking at a system where compliances are baked into the entire process," he said.
Why this matters for insurance professionals
Agentic AI offers a path to handle routine compliance checks and claims-processing tasks at scale, freeing underwriters, claims adjusters, and compliance officers to focus on complex judgment calls. Integrating AI into product suitability assessments directly addresses mis-selling risk - a top source of customer complaints - while real-time transaction monitoring can turn compliance from a periodic audit into an ongoing safeguard. The message from Bhattacharya is clear: AI tools are ready to take on repetitive work, but the final call stays with experienced professionals.
Your membership also unlocks:
