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Insurance costs under lens: RBI flags high-cost distribution driving premium growth, warns of medium-term pressure – The Times of India
The Reserve Bank of India has flagged emerging structural pressures in the insurance sector, warning that premium growth is increasingly being driven by high-cost, distribution-led strategies rather than improvements in operating efficiency, even as the sector remains stable in the near term, according to its latest Financial Stability Report.“While posing no near-term systemic risks, the surface-level stability masks emerging structural pressures that could weigh on medium-term sustainability and coverage expansion,” the RBI said in the report.“A primary pressure is the persistence of a high expense structure, particularly the acquisition costs. Premium growth has been increasingly driven by high-cost distribution-led strategies rather than operating efficiency,” the central bank noted.In the life insurance segment, the RBI said frontloaded acquisition costs have limited the extent to which scale efficiencies are passed on to policyholders. It added that the expected benefits from digitisation have not yet fully materialised.“From a financial stability perspective, continuously elevated expenses could weaken profitability buffers and amplify cyclical vulnerabilities,” the report said.The RBI said a reorientation towards cost rationalisation, better alignment of intermediary incentives with policy persistency and value, and wider adoption of technology-enabled low-cost distribution models are essential to improve the sector’s long-term resilience.Supported by regulatory initiatives such as the risk-based capital framework, enhanced disclosures and strengthened market conduct standards, a sustained moderation in expense intensity would improve consumer value and help the sector transition from a ‘high-cost, low-inclusion’ model to an ‘affordable-cost, broad inclusion and high quality’ equilibrium, it added.According to the report, total premium income rose to Rs 11.9 lakh crore in 2024-25 from Rs 8.3 lakh crore in 2020-21, reflecting continued expansion of the insurance market.“However, total insurance premium masks a significant growth moderation, as the growth rates for both life and non-life sectors have slowed sharply,” the RBI said.At a sectoral level, the life insurance segment continues to exhibit high concentration risk, while the non-life sector has seen a structural shift, with health insurance emerging as the leading segment. Product concentration across both segments indicates limited diversification, the report noted.Total assets under management of the insurance sector stood at Rs 74.4 lakh crore as on March 31, 2025, with life insurers accounting for 91 per cent of total investments, underscoring the sector’s growing role as a major institutional investor.The RBI also highlighted a divergence in cost efficiency between public and private insurers.“Public life insurers show a strong focus on expense management and potentially lower acquisition costs underlined by a flat commission structure despite growing premiums. In contrast, private life insurers show a steep increase in commission pay-outs, particularly surging from 2022-23 onwards, indicating business acquisition at higher marginal cost,” it said.In the non-life segment, public insurers maintain a stable but high expense base, with commission costs remaining low and flat. Private non-life insurers, however, show a sharper escalation in commission expenses, pointing to a high-cost distribution-led growth strategy that could impact underwriting margins, the RBI said.The report also noted that insurance density rose steadily from $78 in 2020-21 to $97 in 2024-25, indicating higher per-capita spending on insurance. At the same time, a decline in insurance penetration suggests that GDP growth has outpaced the rise in premiums.
New Delhi: India and Israel are moving closer to a free trade agreement (FTA), with both sides preparing for the next round of discussions in January. Officials close to the development say teams from both countries will meet early in the New Year to take forward negotiations that formally began in November.
At that time, India and Israel signed the Terms of Reference, beginning the official start of talks on the proposed FTA. The focus of the agreement is to expand trade flows and encourage greater investment between the two economies.
According to officials, the January meetings will centre on the overall structure of the India-Israel FTA and the plan that will guide negotiations. Israeli trade representatives are expected to travel to India for these discussions.
The engagement comes as recent trade data points to a slowdown in bilateral commerce. During 2024-25, India’s exports to Israel fell by 52 per cent to $2.14 billion, compared with $4.52 billion in 2023-24. Imports from Israel also declined in the last financial year, dropping 26.2 per cent to $1.48 billion. Taken together, total bilateral trade between the two countries stood at $3.62 billion.
Despite the recent dip, India is Israel’s second-largest trading partner in Asia. Trade between the two countries has traditionally been dominated by diamonds, petroleum products and chemicals. Over the years, the basket has widened, with growing exchanges in electronic machinery, high-tech products, communication systems and medical equipment.
When it comes to exports, India sends a wide range of goods to Israel. These include pearls and precious stones, automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textiles and garments, base metals, transport equipment and agricultural produce.
Israel’s exports to India also span major sectors. Major items include pearls and precious stones, chemical and mineral products, including fertilisers, machinery and electrical equipment, petroleum oils, defence-related equipment and machinery and transport equipment.
With both sides looking to strengthen economic ties and reverse the recent fall in trade, the upcoming FTA talks are being closely watched as a potential turning point in the India-Israel economic relationship.
Amid reports of a Rs 111 increase in the price of commercial LPG cylinders, the Government on Thursday said that commercial LPG prices are market-determined and directly linked to international benchmarks. Any revision in commercial LPG prices reflects changes in global LPG prices and related costs, while domestic LPG prices for household consumers remain unchanged, Ministry of Petroleum & Natural Gas said.
The ministry said that India imports around 60 per cent of its total LPG requirement. As a result, domestic LPG pricing is linked to international prices, with Saudi Contract Price (CP) acting as the global benchmark. “Accordingly, revisions in commercial LPG prices reflect movements in global LPG prices and associated costs. The prices of domestic LPG remains unchanged,” the ministry added.
While the average Saudi CP increased by about 21 per cent from $ 385 per metric tonne in July 2023 to $ 466 per metric tonne in November 2025, domestic LPG prices in India were actually reduced by around 22 per cent during the same period.
The price came down from Rs 1103 in August 2023 to Rs 853 in November 2025. To protect household consumers, the effective price of a 14.2 kg domestic LPG cylinder, which costs around Rs 950, is being provided at Rs 853 for non-PMUY consumers in Delhi.
For beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY), the effective price is even lower at Rs 553. This marks a reduction of nearly 39 per cent for PMUY consumers, compared to Rs 903 in August 2023, highlighting the Government’s focus on ensuring continued access to clean cooking fuel for economically weaker sections. There has been no change in these prices.
For the financial year 2025–26, the Government has approved the continuation of a targeted subsidy of Rs 300 per domestic LPG cylinder for PMUY beneficiaries, covering up to nine refills per year.
An expenditure of Rs 12,000 crore has been approved for this purpose — reinforcing the commitment to affordable clean energy for households.
Despite a rise in international LPG prices during 2024–25, the increased cost was not passed on to domestic consumers. This resulted in losses of about Rs 40,000 crore for Oil Marketing Companies (OMCs).
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Deepinder Goyal said the record deliveries were completed without any additional incentives for delivery partners
Deepinder Goyal said the gig economy has emerged as one of India’s largest organised job creation engines.
Delivery platform founder Deepinder Goyal defended India’s gig economy, arguing that a system that is fundamentally unfair would not be able to attract and retain large numbers of workers, after delivery partners’ unions held a nationwide strike on December 31.
Deepinder Goyal said that Zomato and its quick-commerce arm Blinkit clocked their highest-ever number of deliveries on New Year’s Eve, despite calls for work stoppages by sections of gig workers.
“One thought for everyone: if a system were fundamentally unfair, it would not consistently attract and retain so many people who choose to work within it,” Deepinder Goyal said in a post on X (formerly Twitter), cautioning against what he described as “narratives pushed by vested interests”.
Record Deliveries Despite Strike, Deepinder Goyal Says
Deepinder Goyal said that more than 4.5 lakh delivery partners across Zomato and Blinkit delivered over 75 lakh orders to more than 63 lakh customers in a single day- an all-time high for the platforms.
Deepinder Goyal said the record deliveries were completed without any additional incentives for delivery partners, adding that while New Year’s Eve typically sees higher incentives than normal days, this year was no different from previous New Year’s periods.
“Over 4.5 lakh delivery partners showed up for work,” he said, calling their participation significant and not negligible.
‘10-Minute Promise Not About Speeding’
In a follow-up post, Deepinder Goyal addressed concerns around Blinkit’s 10-minute delivery promise, pushing back against criticism that such timelines encourage unsafe driving.
“Our 10-minute delivery promise is enabled by the density of stores around your homes. It’s not enabled by asking delivery partners to drive fast,” he said.
Deepinder Goyal said delivery partners do not even see the promised delivery time on their apps.
“Delivery partners don’t even have a timer on their app to indicate what was the original time promised to the customer,” he added.
Explaining the process, he said orders are typically picked and packed within about 2.5 minutes, after which riders travel an average distance of under two kilometres in about eight minutes, translating to an average speed of around 15 kmph.
‘Hard To Imagine The Complexity’
Deepinder Goyal acknowledged public concern around safety, saying the criticism stems from a lack of understanding of how the system works.
“I understand why everybody thinks 10 minutes must be risking lives, because it is indeed hard to imagine the sheer complexity of the system design which enables quick deliveries,” he wrote.
He also urged sceptics to speak directly to delivery partners.
“If you’ve ever wanted to know why millions of Indians voluntarily take up platform work and sometimes even prefer it to regular jobs, just ask any rider partner when you get your next food or grocery order,” he said, adding, “You will be humbled by how rational and honest they will be with you.”
‘No System Is Perfect’
While defending the gig economy, Deepinder Goyal said platforms remain open to improvement.
“No system is perfect, and we are all for making it better than today,” he said, adding that the sector is “far from what it is being portrayed on social media by people who don’t understand how our system works and why”.
“If I were outside the system, I would also believe that gig workers are being exploited, but that’s not true,” he added.
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Delhi, India, India
January 01, 2026, 20:08 IST
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