In 2024, the Swiss insurer Zurich bought a 70% stake in Kotak Mahindra General Insurance. The deal was widely reported as a major foreign investment in India. It was also the clearest sign yet that a years-long change in how India regulates insurance had taken hold.

The dilemma

By the mid-2020s, India had set itself an ambitious goal: "Insurance for All by 2047", the hundredth anniversary of independence. Reaching it would require enormous growth, large amounts of capital, and a steady flow of new insurance products. But India's existing rules were getting in the way. The system required insurers to get formal approval before launching most products, which was slow and left little room to adapt. The government and the regulator faced a real tension. They could loosen the rules to attract investment and speed up innovation, but doing so in a market where consumer protection was still developing carried clear risks.

The regulatory gap

What India needed was a way to let insurers move faster while making sure they remained accountable. If the regulator was going to stop checking every product before launch, then insurers themselves would need stronger internal controls, and the regulator would need to supervise more closely after products reached the market. The shift required building up accountability inside insurance companies at the same time as relaxing the approval process, so that one could safely replace the other.

The approach

The Insurance Regulatory and Development Authority of India, known as IRDAI, moved over several years from a rules-heavy system toward what it calls a principle-based one. Three changes mattered most.

The first was a pathway called "Use and File", which lets insurers launch many products immediately and submit them for regulatory review afterwards, rather than waiting for approval first. The second was a regulatory sandbox, where insurers could test new products, processes, and technologies in a controlled setting. The third was a governance framework that placed clear responsibility for compliance and risk management on each insurer's own board, through dedicated committees of senior managers.

Alongside these changes, the government steadily raised the cap on foreign investment in insurance, reaching 100% in the 2025 to 2026 period. The thinking was that giving insurers room to innovate, while holding their boards accountable for the consequences, would attract investment and speed up growth without sacrificing oversight.

Results achieved

Zurich's purchase of a 70% stake in Kotak Mahindra General Insurance in 2024 was a direct beneficiary of these changes. Under the old system, the deal would have been structurally harder to do. The combination of principle-based regulation and the opening to foreign investment changed the calculation for global insurers thinking about entering India.

The client's own account of the experience is instructive. Zurich has described how the regulator's focus on innovation, customer protection, and operational resilience now allows the company to operate with greater clarity and confidence in a fast-growing market. The wider point Zurich draws from this is that forward-looking engagement with regulation, combined with carefully judged risk-taking, can unlock progress even in a traditionally conservative sector like insurance, with benefits that extend across the broader economy.

The regulator has also launched Bima Sugam, a single digital marketplace for insurance, sometimes described as a "UPI for insurance" because it aims to do for insurance what India's payment system did for payments.

Two limits are worth noting. A principle-based system depends heavily on insurers governing themselves well, because the regulator is no longer checking everything in advance. And the success of the "Use and File" pathway depends on whether the regulator follows through with credible review after products launch. Early signs from investment activity are encouraging. The longer-term evidence on whether the system protects customers and keeps insurers financially sound will take more time to establish.

The transferable lesson

Foreign investment is a useful test of whether a regulatory reform has actually taken hold. Outside investors weigh uncertainty more honestly than companies already established in a market, because they have less reason to be optimistic and more capital at stake. The Zurich and Kotak deal is most interesting not as an insurance story, but as a signal. It marks the point where India's reforms stopped being announced policy and became something investors were willing to put real money behind.