Digital Twins in Insurance Underwriting and Claims Management: Global Evidence and Sustainable Adoption Challenges in India

Abstract

Digital twin technology is transforming insurance underwriting and claims management by reducing information asymmetry between insurers and policyholders. Insurers are shifting from a static, disclosure-based risk assessment to real-time, evidence-driven decision-making by creating dynamic digital representations of physical assets, processes, or insured behaviour. Globally, digital twin technology contributes to the sustainability of insurance systems through cost efficiency, faster claim settlements, and greater financial resilience. The following study uses global case studies from insurers in the USA, China, and Europe to explain how digital twin-enabled systems mitigate information asymmetry across underwriting and claims functions. The present study focuses on the adoption of digital twins in the Indian insurance market, with a focus on motor, property, and industrial/commercial insurance. Using secondary sources and interviews of practitioners in the insurance domain, this study identifies regulatory, technological, operational, and economic hurdles for digital twin adoption. The study also proposes segment-specific solutions to enhance the integration of digital twins in underwriting and claims management. The findings of this study indicate that only telematics-based motor insurance represents an impactful deployment of the digital twin principle in India. Property and industrial insurance still rely on static, manual, and post-loss processes. Furthermore, digital twin adoption will evolve incrementally in India and augment human expertise in underwriting and claims assessment.