Nirmala Sitharaman,Union Finance Minister
“We want the regulator (Insurance Regulatory and Development Authority of India) also to be more robust. We have taken measures around this in the amendment ranging from better regulatory oversight, ease of compliance, insurance intermediaries to provide uninterrupted services, and so on,” the Finance Minister said.
New Delhi:A Bill seeking to raise Foreign Direct Investment (FDI) in the insurance sector to 100 per cent was on Tuesday introduced in the Lok Sabha amid strong protest from the Opposition.
Finance Minister Nirmala Sitharaman introduced the Insurance Laws (Amendment) Bill, 2025, titled “Sabka Bima Sabki Raksha”, in the Lok Sabha, aiming to strengthen policyholder protection, deepen insurance penetration and accelerate the growth of the insurance sector in the country.
This legislative move follows the Cabinet’s recent approval to overhaul the sector.
The industry is now waiting eagerly how quickly parliament is passing the bill and whether it will be referred to a Select Committee of parliament.
Introducing the Bill, Union Finance Minister Nirmala Sitharaman said, “The common people’s insurance has always been the focus of Prime Minister Narendra Modi, and the Central government has provided insurance to the marginal sections of society even during the Covid pandemic.”
Sitharaman said the bill provides for improved regulatory oversight.
“We want the regulator (Insurance Regulatory and Development Authority of India) also to be more robust. We have taken measures around this in the amendment ranging from better regulatory oversight, ease of compliance, insurance intermediaries to provide uninterrupted services, and so on,” the Finance Minister said.
“We are also treating both intermediaries and insurance companies with a lot more standardized approach so that whenever they do anything, they will have to have a stakeholder consultation before they bring in any policy,” she added.
The Union Minister highlighted the recent measures taken by the government for the Insurance sector.
“The government has recently come up with several flagship programs, like PM Jeevan Jyothi Yojana, PM Suraksha Bhima Yojana, PM Jan Aarogya Yojana, and Krishi Bhima Yojana aimed for the inclusion of the poorest sections of the society who can’t afford insurance,” she said.
She said the government also has been making sure that the public sector insurance companies can meet the insurance requirements of the people.
“By listing of LIC, we have made it transparent for the citizens”.
She said that reforms, along with regulatory strengthening, have resulted in measurable growth.
Sitharaman said, “Objections of some of the Opposition members could be part of the debate, and she was ready to answer all their questions during the debate on the proposed legislation.”
Opposing the introduction of the Bill, RSP member N.K. Premachandran said, “The nomenclature of the Bill has nothing to do with its contents.” He also opposed the proposal to allow 100% FDI in the insurance sector.
DMK member T. Sumathy, too, strongly opposed 100% FDI in the sector. TMC member Saugata Roy said, “The name of the Bill looks like the slogans of the ruling coalition, and such names should not be part of any Bill.” He said that allowing 100% FDI will be a backward step in the insurance sector.
The Bill seeks to amend key legislations, including the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. The proposed amendments are aligned with the government’s long-term vision of achieving ‘Insurance for All by 2047’ and improving ease of doing business in the sector.
A major highlight of the Bill is the proposal to raise the Foreign Direct Investment (FDI) limit in Indian insurance companies from the existing 74 per cent to 100 per cent. The government said the move is intended to attract stable, long-term foreign capital, facilitate technology transfer, and enhance insurance penetration and social security coverage across the country.
To strengthen consumer protection, the Bill proposes the establishment of a Policyholders’ Education and Protection Fund. The fund will focus on enhancing insurance awareness and safeguarding the interests of policyholders. In a significant regulatory empowerment, IRDAI is proposed to be granted the authority to disgorging wrongful gains, enabling the regulator to recover illegal or unfair gains made by insurers and intermediaries.
The Bill also provides a legal framework for the creation and effective use of digital public infrastructure in the insurance sector, with a focus on securing and protecting policyholder data. This is expected to support innovation while ensuring data privacy and cybersecurity.
In a move aimed at easing business operations and ensuring uninterrupted customer services, the Bill proposes one-time registration for insurance intermediaries. Further, the threshold for seeking IRDAI approval for the transfer of shares in insurance companies is proposed to be raised from the current 1 per cent to 5 per cent of paid-up equity capital.
The reinsurance sector is set to receive a major boost, with the proposed reduction in the Net Owned Fund requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore. This is expected to facilitate the entry of more global reinsurers and enhance domestic reinsurance capacity.
The Bill also provides greater operational autonomy to state owned, the Life Insurance Corporation of India (LIC), allowing it to set up zonal offices and align its overseas operations with the laws and regulations of respective jurisdictions.
To improve regulatory governance, the amendments in the bill propose the introduction of a Standard Operating Procedure (SOP) for regulation-making under the IRDAI Act. Additionally, a transparent and rational framework for levying penalties is proposed, with clearly defined factors to guide fair imposition.
The Bill is expected to expand insurance coverage, bring more citizens under the insurance security net, and encourage the entry of more insurers, agents and intermediaries, thereby driving faster growth while ensuring stronger protection for policyholders
These measures are intended to support the government’s vision of “Insurance for All by 2047”. The Winter Session of Parliament is scheduled to conclude on December 19, 2025.
with inputs from Agencies