Insurance Amendment Bill 2025: Sabka Bima Sabki Raksha Bill Clears 100% FDI; How Will It Benefit Policyholders

The Lok Sabha on Tuesday passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, marking a major reform in India's insurance sector. The government said the changes will improve competition, attract more investment and make insurance more affordable and accessible for people across the country.

Insurance Amendment Bill 2025: Sabka Bima Sabki Raksha

The bill amends three key laws governing the insurance industry-the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. Through these amendments, the government aims to modernise regulations, improve governance, and enhance consumer protection mechanisms.

Biggest Change: 100% FDI Allowed in Insurance Sector

One of the most significant provisions in the bill is the proposal to raise the foreign direct investment (FDI) limit in insurance companies from 74 percent to 100 percent. This change will allow foreign insurers to own Indian insurance companies fully, although the bill includes a safeguard requiring that at least one top executive position, such as Chairman, Managing Director, or CEO, be held by an Indian citizen to ensure domestic oversight.

The bill also seeks to strengthen the powers of the insurance regulator, IRDAI, by allowing it to recover wrongful gains and take stricter enforcement action against erring companies. These enhanced powers are intended to improve transparency, ensure compliance, and better protect the interests of policyholders, similar to the enforcement framework followed by market regulator SEBI.

The government believes that allowing 100 per cent FDI will attract more global insurance players to India, increasing competition in the market. This is likely to benefit customers through lower premiums, improved policy features, and a wider range of insurance products across health, life, and general insurance segments.

Increased foreign investment is also expected to provide insurance companies with additional capital to strengthen digital infrastructure, speed up claim settlement processes, and improve overall customer service. Consumers may also see the introduction of new insurance products based on international best practices, such as customised health covers and long-term retirement solutions.

LIC to Get More Autonomy and Faster Decision-Making

Another important aspect of the legislation is the greater operational autonomy granted to the Life Insurance Corporation of India. Under the proposed changes, LIC's board will be able to take faster decisions on expansion and administrative matters, including opening new zonal offices without prior government approval, which is expected to improve efficiency and competitiveness.

Addressing concerns about public sector insurers, the Finance Minister clarified that strengthening government-owned insurance companies remains a priority. Since 2014, several measures have been taken to improve their financial health, and increased competition from private and foreign players is expected to further push these companies to enhance service quality and efficiency.

What Does Amendment in Insurance Bill 2025 for the Common Man?

For the common man, the passage of this bill could lead to more affordable insurance, faster and more transparent claim settlements, and greater choice in policy options. The government emphasised that strong regulatory oversight will remain in place to safeguard consumer interests while allowing the sector to grow.

How Will 100% FDI Benefit Insurance Customers?

Allowing full foreign ownership is expected to bring more global insurance companies into India. This increased competition may result in:

• Lower insurance premiums
• Better coverage and features
• More choice in health, life and general insurance policies
• Customers will be able to choose from a wider range of products that suit their individual needs.

"Opening up insurance to 100% foreign investment comes at the right time, especially with the goal of insurance for all by 2047. The sector needs long-term capital and global experience to reach deeper into under-insured segments and handle more complex risks. Done right, this move can help insurers build better products, improve service quality, and scale distribution beyond the metros. For customers, it should translate into wider choice and more reliable protection, while keeping strong regulation firmly in place," said Saharsha Keshkar, Head of Strategy and International Business, EDME Insurance Brokers Ltd.

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