New Delhi: Parliament has approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, paving the way for up to 100% foreign direct investment (FDI) in insurance companies, a move aimed at attracting global capital, improving insurance penetration and strengthening the sector’s regulatory framework.
The legislation amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999. According to the government, higher foreign investment will support capital augmentation, adoption of advanced technology and global best practices, while also boosting employment and competition in the sector.
To improve ease of doing business, the Bill introduces one-time licensing for intermediaries and allows for suspension of licences instead of outright cancellation. For insurers, the threshold for seeking prior regulatory approval for transfer of share capital has been raised from 1% to 5%, while the net owned fund requirement for foreign reinsurance branches has been sharply reduced to ₹1,000 crore from ₹5,000 crore.
The amendments also grant greater operational autonomy to Life Insurance Corporation of India, including flexibility to open zonal offices and align overseas operations with local regulations.
On the consumer protection front, a dedicated Policyholders’ Education and Protection Fund will be created to enhance insurance awareness, while insurers will be required to collect and safeguard policyholder data in line with the Digital Personal Data Protection Act, 2023. Regulatory governance has been strengthened by mandating consultative rule-making and empowering IRDAI to disgorge wrongful gains and rationalise penalties.