Bajaj Finserv goes solo – can it conquer India’s insurance market without Allianz?

WHEN IT COMES to life insurance, most Indians remain underprepared. According to the newly released ‘Underinsurance Survey 2025’ by Bajaj Allianz Life, 81% of respondents believe their current life cover is adequate. In reality, the average cover is just 3.1 times of annual income — far below the 10x benchmark financial planners suggest.

The irony? This latest snapshot of India’s chronic protection gap may be the last to carry the Bajaj Allianz name. After a 24-year partnership — among the longest-standing joint ventures in Indian insurance — Bajaj Finserv and Allianz SE are going their separate ways. Bajaj will acquire Allianz’s 26% stake in both joint ventures — it will pay ₹13,780 crore for Bajaj Allianz General Insurance (BAGIC) and ₹10,400 crore for Bajaj Allianz Life (BALIC) — gaining full control just as India begins dealing with its massive underinsurance challenge.

On paper, it’s a business transaction. In context, it’s a strategic inflection point. While the exact reasons for the split remain undisclosed, what’s clear is that Bajaj believes it’s ready to go it alone — leading two insurance businesses that together clock over ₹40,000 crore in premiums. It’s stepping into this new chapter just as the Indian market opens to 100% foreign direct investment and competition intensifies across life, health, and general insurance.

“Given the advantage of a single ownership in both companies, we are confident that the acquisition will become a big driver of value for our stakeholders in the years to come,” said Sanjiv Bajaj, Chairman and Managing Director, Bajaj Finserv, in a company statement. The confidence is well-founded: BALIC has a solvency ratio of 4.32x, far above the regulatory requirement of 1.5x, while BAGIC, India’s second-largest private general insurer, enjoys a solvency ratio of 3.49x against the stipulated 1.5x.

Though Allianz’s exit is headline-worthy — reports suggest the German insurer is now exploring a tie-up with Jio Financial Services — Bajaj’s leadership is quick to shift the focus away from shareholder dynamics. “The opportunity now lies in deeper India, and that has nothing to do with a shareholder’s exit,” says S. Sreenivasan, president – insurance & special projects, Bajaj Finserv. “What’s really changed is technology and AI — they’ve made it possible to reach semi-urban and rural markets more efficiently than ever before.”

In towns where financial literacy is low and insurance gets edged out by daily wallet decisions, Bajaj sees a chance to reset the conversation. The strategy: meet customers on their terms, through mobile-first, low-cost, need-driven products — not just through traditional agents. The company is also leveraging its strength in crop insurance, Ayushman Bharat health schemes, and tie-ups with microfinance institutions (MFIs) to build deeper roots across Tier II and III towns in India.

Still, closing India’s protection gap won’t happen overnight. “Buying insurance doesn’t provide instant gratification,” says Sreenivasan. “It competes with many other wallet priorities. But global data shows that once a country crosses around $3,500 in per capita income, insurance uptake accelerates. India is inching towards that point.”

That moment — when aspiration meets affordability — could change everything. Yet trust, while essential, is no longer enough. “Insurance is still a push product,” notes Saurabh Bhalerao, associate director, CareEdge Ratings. “Within general insurance, when it comes to motor insurance, 55–57% of vehicles on the road are still not insured.”

This behavioural lag has implications for both business models and product design. With full strategic control, Bajaj now has the freedom to evolve beyond traditional formats. The focus is shifting to purpose-built offerings: income protection for gig workers, cyber coverage for digital users, global health plans for the aspirational middle class, and small-ticket savings for underserved communities.

“We’ve pioneered several products,” Sreenivasan points out, referencing offerings like annually renewable travel insurance within India, global health plans, and cyber risk covers. But he’s also realistic: “For any insurance product to succeed, there must be a minimum volume for the risk to be diversified.” In other words, even the most innovative products won’t be sustainable unless a broad enough customer base participates — spreading risk and keeping premiums viable.

And competition is only intensifying. While India’s insurance penetration still lags global averages (7% in mature markets versus around 3% domestically), scaling up isn’t easy anymore. “Today, if you launch a life insurance company, it’s expected that you’ll be able to deliver everything — online presence, bancassurance tie-ups, IT — all in place,” says Bhalerao. “Older players built it over time. New players have to do it from Day One.”

Even as the industry leans into digital-first journeys, Bajaj remains grounded in the role of the human advisor. “Agents aren’t going anywhere,” Sreenivasan says. “It’s still a career that rewards patience and personal relationships. Many of our agents are second- and third-generation [ones]. They’re as much a part of our growth story as our technology is.”

As Allianz exits, Bajaj isn’t just assuming control — it’s stepping into a new era. Because in a country only beginning to embrace insurance, the most important policy may not be the one a customer buys — but the one the insurer chooses to believe in.