Insurance Amendment Bill likely to be tabled in Lok Sabha today

The Union government is expected to introduce an amendment to insurance laws in the Lok Sabha on Tuesday (December 16), with Finance Minister Nirmala Sitharaman scheduled to table the proposed legislation.

Officials familiar with the matter said the Bill may seek to update provisions across multiple insurance-related statutes, with the objective of modernising the regulatory framework and supporting the growth of the insurance sector.

While the details of the Bill will be known only after its formal introduction, industry observers expect the proposed amendments to focus on modernising the insurance regulatory framework, improving capital

availability and supporting the government’s longer-term goal of expanding insurance coverage across the country.

One of the key areas the government may address is foreign direct investment (FDI) in the insurance sector.

Experts note that higher foreign capital participation could help insurers strengthen balance sheets and support growth in underpenetrated segments.

Peuli Das, Partner – Actuarial Services at BDO India, said additional capital inflows through FDI could support insurance penetration and sectoral growth.

“The Indian insurance industry has effectively utilised the 74% FDI limit, and capital infusion remains essential for driving penetration. Higher foreign participation can also bring stronger financial discipline through better price discovery and cost controls,” she said, adding that increased competition could support more sustainable growth over time.

Legal experts point out that enabling legislative changes could accelerate implementation of reforms already under discussion.

Aravind Venugopal, Partner at Khaitan & Co, said an increase in the FDI cap to 100% would represent a structural shift for the sector.

“Once the enabling legislative changes are carried through, we could see quicker execution. Full management control materially improves governance, speed of decision-making and accountability,” he said.

According to him, interest from global insurers may be strongest in general and health insurance, while life insurance entrants may still need to evaluate distribution strategies.

Industry participants also expect higher capital inflows to influence adjacent segments of the insurance ecosystem.

Hanut Mehta, CEO and Co-founder of BimaPay Finsure, said greater foreign participation could lead to faster scaling by insurers and increased focus on affordability and flexible payment options.

He noted that premium financing could play a larger role as insurers expand into underinsured segments, even as competition and regulatory scrutiny intensify.

Rakesh Goyal, Director at Probus, said allowing 100% FDI could encourage new global insurers to enter India with full ownership, potentially reducing friction seen in joint-venture structures.

“Over time, this competitive pressure could improve product innovation, financial strength and customer value. The key will be how final rules balance foreign participation with policyholder protection,” he said.