In a landmark move to transform the insurance landscape, Finance Minister Nirmala Sitharaman on Tuesday tabled the Insurance Laws (Amendment) Bill, 2025, in the Lok Sabha. The proposed legislation, aptly named "Sabka Bima Sabki Raksha," seeks to radically open the sector by allowing 100 per cent Foreign Direct Investment (FDI), a significant jump from the current 74 per cent limit.
Key Objectives and Vision of the Bill
Sitharaman outlined the Bill's core mission: to fortify policyholder safeguards, significantly deepen insurance penetration across India, and accelerate the sector's overall growth. The amendments target three pivotal laws: the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the IRDAI Act of 1999. This overhaul is aligned with the government's ambitious long-term goal of achieving 'Insurance for All by 2047' and improving the ease of doing business.
The Finance Minister emphasized that the move to 100% FDI is strategically designed to attract stable, long-term foreign capital, facilitate the transfer of advanced technology, and ultimately expand social security coverage nationwide.
Major Reforms and New Provisions
The Bill introduces several groundbreaking changes aimed at modernizing the regulatory framework and empowering consumers.
A dedicated Policyholders' Education and Protection Fund will be established to boost insurance awareness and safeguard customer interests. In a major boost to regulatory powers, IRDAI will be granted the authority for disgorgement of wrongful gains, allowing it to recover illegal profits made by insurers and intermediaries.
The legislation also lays down a legal foundation for digital public infrastructure within the sector, with a sharp focus on securing policyholder data. To streamline operations, the Bill proposes a one-time registration system for insurance intermediaries, ensuring smoother business and uninterrupted customer service.
For the state-owned behemoth LIC, the amendments promise greater operational autonomy, enabling it to set up zonal offices and better align its overseas operations. Furthermore, the threshold for seeking IRDAI approval for share transfers in insurance companies is set to be raised from 1% to 5% of the paid-up equity capital.
Expected Impact and the Road Ahead
The comprehensive bill is anticipated to be a catalyst for expanding insurance coverage, bringing millions more Indians under a reliable security net. It also proposes introducing a Standard Operating Procedure (SOP) for regulation-making under the IRDAI Act, promising more transparent and efficient governance.
By combining capital infusion with robust consumer protection and digital innovation, the Insurance Laws (Amendment) Bill, 2025, charts a decisive course for a more accessible, secure, and globally competitive insurance industry in India.
