Moved by Union Finance Minister Nirmala Sitharaman, the Bill follows prior introduction in the House earlier in the day. It was also earlier approved by the Union Cabinet ahead of the Winter Session of Parliament.
File Photo: IANS
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, a landmark legislation aimed at modernizing India’s insurance regulatory framework, was passed in the Lok Sabha on Tuesday.
Moved by Union Finance Minister Nirmala Sitharaman, the Bill follows prior introduction in the House earlier in the day. It was also earlier approved by the Union Cabinet ahead of the Winter Session of Parliament.
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The Bill proposes comprehensive amendments to the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. Its objectives include expanding insurance coverage, strengthening regulatory oversight, and promoting sectoral growth.
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A key provision raises the Foreign Direct Investment (FDI) limit in Indian insurance companies from 74% to 100%, a pivotal reform designed to attract increased foreign capital, boost competition, accelerate technology adoption, and support the government’s goal of ‘Insurance for All by 2047.’ This is expected to foster innovation, enhance customer-centric services, and bring underwriting and claims management in line with global standards.
The Bill also lowers the Net Owned Funds (NOF) requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, encouraging wider participation beyond the public sector General Insurance Corporation (GIC). This move aims to improve reinsurance capacity, competition, and risk diversification.
Additionally, the IRDAI is granted disgorgement powers to recover wrongful gains, strengthening its enforcement capabilities similar to SEBI.
The Bill introduces a one-time registration for insurance intermediaries to ease compliance, increases the IRDAI approval threshold for equity transfers from 1% to 5%, and mandates formal standard operating procedures (SOPs) to ensure transparency and consistency in regulation-making.
For LIC, the Bill grants greater operational autonomy by allowing it to open new zonal offices without prior government approval and to restructure overseas operations according to host-country laws, aiming to modernize governance and enhance competitiveness both domestically and internationally.
While the Bill brings transformative changes, certain industry demands—such as the introduction of a composite licence—have been excluded or softened, leading to mixed reactions from stakeholders.
Overall, the legislation strives to balance industry growth, consumer protection, and wider financial sector reforms and is expected to spark substantial parliamentary debate in forthcoming sessions.
Finance Minister Nirmala Sitharaman emphasized that the Bill’s core mission remains steadfast: to accelerate sectoral growth, safeguard policyholders, and simplify the business environment for insurers and intermediaries alike.
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