The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, a landmark move aimed at modernising India’s insurance regulatory framework, was introduced in the Lok Sabha on Tuesday. Presented by Union Finance Minister Nirmala Sitharaman, the Bill follows prior approval by the Union Cabinet ahead of the Winter Session of Parliament.
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.
A key provision raises the Foreign Direct Investment (FDI) limit in Indian insurance companies from 74 per cent to 100 per cent, 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 align underwriting and claims management 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 per cent to 5 per cent, 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 modernise 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.