Despite the Bill to hike FDI in the insurance sector to 100 per cent, one of the top officials — Chairman, Managing Director, or CEO — must be an Indian citizen.It also paves the way for the merger of a non-insurance company with an insurance company.

New Delhi: The government is planning to introduce a Bill in Parliament this week to raise FDI in the insurance sector to 100 per cent, with a view to providing insurance to all by 2047.

With regard to the term of office of the chairperson and other whole-time members of the IRDAI, the Bill provides for a five-year term or until they attain the age of 65 years, whichever is earlier.

At present, the upper age limit for IRDAI’s whole-time members is 62 years, while for the chairman it is 65 years.

The chairperson and every other whole-time member shall hold officefor a term of five years from the date on which he enters upon his office and shall be eligible for reappointment.

However, no person can hold office as a chairperson after he has attained the age of sixty-five years and similarly no person can hold office as a whole-time member after he has attained the age of sixty-two years.

The bill has specified that the IRDAI will constitute a Reserve Fund and twenty-five per cent. of the annual surplus of the Fund in any year will be credited to such Reserve Fund and such fund will not exceed the total of annual expenditure of preceding three financial years.After incurring all the expenses and transfer to Reserve Fund the surplus of the Fund shall be transferred to the Consolidated Fund of India.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, seeks to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999, according to the Bill circulated to members of Parliament ahead of its introduction in Parliament.

The amendment will raise the Foreign Direct Investment limit in the insurance sector from 74 per cent to 100 per cent, it said.

Despite the Bill to hike FDI in the insurance sector to 100 per cent, one of the top officials — Chairman, Managing Director, or CEO — must be an Indian citizen.
It also paves the way for the merger of a non-insurance company with an insurance company.

The Bill received the Union Cabinet’s nod on Friday, paving the way for its introduction in Parliament.

The Bill further aims to accelerate the growth and development of the insurance sector and to ensure better protection of policyholders, as per the statement of objects and reasons.

The Bill provides for the establishment of the Policyholders’ Education and Protection Fund to protect policyholders’ interests.

It would also improve the ease of doing business for insurance companies, intermediaries, and other stakeholders, bring transparency to regulation-making, and enhance regulatory oversight over the sector, it said.

Finance Minister Nirmala Sitharaman, in this year’s Budget speech, proposed to raise the foreign investment limit to 100 per cent from the existing 74 per cent in the insurance sector as part of new-generation financial sector reforms.

So far, the insurance sector has attracted Rs 82,000 crore through foreign direct investment (FDI).

The amendments to the LIC Act propose empowering its board to take operational decisions, such as branch expansion and recruitment.

The proposed amendment primarily focuses on promoting policyholders’ interests, enhancing their financial security, and facilitating the entry of additional players into the insurance market, thereby driving economic growth and employment generation.