What is the story about?
ntThe year 2025 marked a turning point for India’s insurance industry, with sweeping regulatory reforms, consumer-centric policy changes and a strong push
toward digitalisation. From opening the sector to 100 per cent foreign direct investment (FDI) to faster cashless claims and GST relief, the changes aimed to improve affordability, access and protection for policyholders.
Here's the list of the top 10 reforms in India’s Insurance Sector in 2025:
1. Insurance Act Amendment and 100% FDI
The amendment to the Insurance Act under the “Sabka Bima, Sabki Suraksha” vision allowed 100% foreign direct investment (FDI) in the insurance sector. It also enhanced IRDAI’s powers over commissions and remuneration, permitted mergers between insurance and non-insurance companies, introduced a Policyholders’ Education and Protection Fund, and enabled one-time registration for intermediaries.2. GST Exemption for Life and Health Policies
To improve affordability, the government exempted individual life and health insurance policies from GST, effective September 22, 2025. The move reduced premium costs and made insurance more accessible to millions of consumers.
3. Launch of Bima Sugam Platform
IRDAI launched the Bima Sugam digital platform in 2025 under Chairman Ajay Seth. While the website went live this year, the integrated end-to-end insurance marketplace is expected to become fully operational in 2026.
4. Health Insurance Master Circular
Effective April 1, 2025, IRDAI’s Health Insurance Master Circular removed upper age limits for buying or renewing policies, reduced waiting periods for pre-existing diseases to three years, and mandated coverage for several illnesses.
5. Faster Cashless Claims Norms
IRDAI introduced time-bound cashless claim approvals, mandating initial approval within one hour and final discharge approval within three hours, alongside a push toward 100 per cent cashless claim settlements.
6. Strengthening Consumer Grievance Redressal
A draft framework for Internal Ombudsman systems was issued, focusing on stronger in-house grievance redressal mechanisms and enhanced consumer protection, with consultations held during 2025.
7. Bima ASBA via UPI
The regulator introduced Bima ASBA, enabling insurance premium payments through UPI. Similar to IPO applications, funds are blocked during application and debited only after policy issuance.
8. Rural, Social and Motor Compliance Reforms
IRDAI issued a master circular on rural and social obligations, reinforcing insurers’ responsibilities toward underserved segments, while also updating motor third-party compliance norms.
9. Cyber Crisis Preparedness Measures
IRDAI released a cyber crisis preparedness circular, directing insurers to strengthen cyber resilience and mitigate operational and data security risks amid growing digital adoption.
10. Leadership and Awareness Push
The appointment of Ajay Seth as IRDAI Chairman in 2025 was accompanied by a renewed focus on insurance awareness. Nationwide campaigns such as “Sab Insurance, Achhi Insurance” were launched to boost penetration and consumer literacy.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
