Customer acquisition in the insurance industry continues to depend heavily on expensive intermediary networks inspite of the push for digital transformation, Economic Survey 2025-26 said, making a case for rationalising the cost structure. Economic Survey 2025-26 LIVECounting high operating costs among structural challenges, the authors of the Survey said instead of technology leading to cost rationalisation, the costs have steadily increased with a significant portion of premiums being consumed by distribution overheads. Risk to core strengthAccording to the Economic Survey a high-cost model poses a risk to the core financial strength of insurers. This indicates that while the sector is successful in ‘deepening’ revenue from existing customers, high distribution costs are preventing a ‘widening’ of the risk pool. The rigid cost structure means premium growth fails to keep pace with nominal GDP, eroding the sector’s relative economic size, the Survey authors said.