Yet, their journeys since liberalization could not have been more different.
Aviation: A story of aspiration, but also fragility
Aviation was among the first sectors to be liberalized in the 1990s. The promise was immense: improved connectivity, stronger tourism, and global mobility. Private carriers delivered much of this—expanding tier-2 and 3 networks and improving service standards.
But the sector has witnessed repeated turbulence.
Kingfisher Airlines collapsed under the weight of debt and inefficiencies. Jet Airways, once the industry leader, shut down following sustained financial stress. More recently, flight delays, staffing shortages and operational disruptions at IndiGo have again placed the spotlight on the fragility of airline operations.
Aviation remains capital-intensive, operationally complex, and acutely vulnerable to shocks—fuel prices, exchange rates, geopolitical developments, and airport bottlenecks. India still lacks the repair, maintenance, training, and airport infrastructure required for sustainable growth. Without deeper long-term capital and infrastructure investment, cycles of crisis may continue.
Insurance: A sector that has grown, stabilized—and is maturing
The insurance sector opened to private participation in 2000. At the time, India had only six insurers, almost entirely government-owned. Today, there are more than 60 insurers across life, general, health, and specialized segments.
From day one, insurance regulation brought clarity: minimum capital requirements, fit-and-proper promoters, solvency norms, and a commitment to long-term capital. Reinsurance arrangements were carefully structured and approved to ensure stability in the event of large losses.
The Insurance Regulatory and Development Authority of India (IRDAI) put in place a framework built on financial discipline, governance, and consumer protection.
However, it is important to note—as some readers may have experienced—that insurance is not absolutely painless for consumers. There is no systemic risk, but individual customers do face real challenges. Health insurance disputes involving claim delays, deductions, and hospitals rise every year. Motor and crop insurance claims cycles have similar pain points.
Private Insurance in India is structurally stable and well-capitalized, but the customer experience still has significant room for improvement.
Why the differences matter
Both aviation and insurance are retail-heavy and job-creating sectors that attract foreign direct investment (FDI) and are essential for nation-building. But their divergent outcomes highlight one truth:
- Aviation scaled faster than infrastructure and governance capacity.
- Insurance grew steadily under strong regulatory guardrails.
Thus, India’s insurance sector today is seen as stable and earning increasing credibility, while aviation continues to wrestle with sustainability and operational resilience.
Yet, customers have suffered in both—whether through delayed flights or delayed insurance claim settlements. Liberalization alone does not guarantee service quality.
India’s underpenetrated future—and the imperative to encourage growth
Despite the progress, India remains one of the most underpenetrated insurance markets in the world. Life and health insurance coverage is improving but still limited, leaving millions exposed to financial shocks. Catastrophe losses also remain significantly uninsured.
Aviation, too, has immense potential—India is poised to become among the world’s top three aviation markets. But this will require modern airports, maintenance, repair and overhaul (MRO) facilities, trained manpower, and predictable policy.
Actionable insights: what India must do next
In insurance, the absolute need of the hour is to strengthen consumer protection. This involves mechanisms to fast-track claims settlement standards, improve interoperability between insurers and hospitals and mandate greater transparency in deductions and claim status.
In aviation, it’s important to accelerate airport and MRO capacity creation, increase training capacities and create a predictable regulatory and cost environment.
What’s common is that both sectors require investors willing to stay through multi-year cycles, and not chase short-term returns. For India’s emerging middle class, trust in a policy or a flight is the ultimate currency. And reforms need to be in that direction.
The larger message
The liberalization of aviation and insurance marked a defining step in India’s economic modernization. But the last 25 years show that liberalization is only the beginning. What matters just as much is the quality of governance, the depth of infrastructure, and the long-term commitment of capital and promoters.
If India is to sustain high GDP growth, both aviation and insurance must expand—not in fits and starts, but steadily, responsibly, and with consumer trust at the core. Consumers of insurance benefit the most when they are able to hold the policy for the long term with the trust that it will come to their rescue when needed.
Antony Jacob has led one of India’s leading health insurance companies and advises organizations across the healthcare and insurance sectors.
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