New Delhi, Dec 16 (UNI) The Lok Sabha on Tuesday introduced the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, marking a significant step toward modernising India’s insurance regulatory framework.
The Bill was moved for introduction by union Finance Minister Nirmala Sitharaman and follows earlier approval from the union Cabinet ahead of the Winter Session of Parliament.
The Bill proposes sweeping amendments to key legislations-the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999-with the aim of expanding insurance coverage, enhancing regulatory oversight, and fostering sectoral growth.
The Bill raises the FDI cap in Indian insurance companies from 74 percent to 100 percent, a long-awaited reform intended to attract greater foreign capital, enhance competition, promote advanced technology adoption, and support the government’s vision of ‘Insurance for All by 2047.’ This move is expected to drive innovation, improve customer-centric services, and align underwriting and claims management with global best practices.
The Bill reduces the Net Owned Funds (NOF) requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, broadening market participation beyond the public sector General Insurance Corporation (GIC). This is anticipated to increase reinsurance capacity, competition, and risk diversification.
IRDAI is granted disgorgement powers to recover wrongful gains, aligning its enforcement toolkit closer to that of SEBI. The Bill also introduces a one-time registration process for insurance intermediaries to simplify compliance, raises the threshold for IRDAI approval on equity transfers from 1 percent to 5 percent, and mandates formal standard operating procedures (SOPs) for regulation-making to improve transparency and consistency.
The Bill empowers LIC to open new zonal offices without prior government approval, enabling quicker expansion and operational efficiency. It also allows restructuring of overseas operations in accordance with host-country laws, aiming to modernize LIC’s governance and boost its competitiveness domestically and globally.
While the Bill introduces transformative changes, some industry demands—such as the introduction of a composite licence—have been excluded or diluted, resulting in mixed reactions from stakeholders. Overall, the Bill seeks to balance insurance sector growth, consumer protection, and broader financial reforms, and is expected to invite substantial parliamentary debate in the coming sessions.
Lok Sabha introduces Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025
