Insurance Amendment Bill 2025: A bill proposing to raise the Foreign Direct Investment (FDI) limit to 100% in the Insurance sector has been tabled today in Lok Sabha by Union Finance Minister Nirmala Sitharaman.
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 aims to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999.
The bill is set to raise the FDI cap from 74 per cent to 100 per cent in Indian Insurance companies, although with a proposal to have one of the top officials – Chairman, Managing Director, or CEO – as an Indian citizen to retain certain domestic control.
It offers liberalization, lesser regulatory control, attracts foreign capital, and accelerates the growth and development of the Insurance sector, with the goal to provide insurance to all by 2047.
Opening the sector fully to global capital sends a strong signal of confidence in India’s insurance market and regulatory maturity, according to Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI).
“This reform will enable insurers to access long-term capital, advanced risk-management expertise, global best practices and cutting-edge technology, critical ingredients for expanding insurance coverage, improving product innovation and strengthening claims and service capabilities across the country,” Bharindwal added.
Bharindwal said that from an insurer’s standpoint, enhanced capital availability will support deeper penetration in under-insured and rural markets, facilitate the development of specialised products such as health, catastrophe, cyber and longevity covers, and allow companies to make sustained investments in distribution, digital infrastructure and human capital.
Rakesh Goyal, Director, Probus added that allowing 100% FDI in insurance will primarily unlock much stronger capital flow into the sector.
“What this means for the market is sharper product innovation. Several global insurers who were earlier hesitant to partner locally may now see India as a serious opportunity. If strong, well capitalised players enter with differentiated offerings, it will not only improve product quality and solutions but also push existing insurers to innovate faster. Over time, this competitive pressure can significantly improve insurance penetration and customer value in India,” he added.
Other Features of the Insurance Amendment Bill, 2025
The bill aims to grant the insurance regulator IRDAI new powers to recover wrongful gains, similar to SEBI’s enforcement toolkit.
It also allows LIC to set up new zonal offices without prior government approval, enabling faster expansion and administrative efficiency.
India’s insurance sector performance
As per the latest data, India’s insurance penetration -or percentage of total premium against GDP- dropped to 3.7% in 2023-24 from 4% in 2022-23. It fell to 2.8% from 3% life insurance and remained steady at 1% in non-life insurance.
So far, India’s insurance industry has garnered Rs 82,000 crore through foreign direct investment (FDI).
