In a bold move to attract more global investment, Finance Minister Nirmala Sitharaman introduced the Insurance Laws (Amendment) Bill, 2025 in the Lok Sabha. The bill, titled “Sabka Bima Sabki Raksha”, proposes raising the FDI limit in the insurance sector from 74% to 100%.
This amendment aims to boost foreign capital inflow, strengthen policyholder protection, and deepen insurance penetration across India. The government also sees it as a key step toward achieving its “Insurance for All by 2047” goal.
Key Reforms to Reshape the Sector
- Policyholder Protection Fund: A new fund will be created to increase awareness and safeguard the interests of policyholders.
- Stronger Regulatory Powers: IRDAI will gain the authority to recover unfair gains made by insurers or intermediaries.
- Digital Infrastructure: The bill proposes a legal framework for securing digital public infrastructure in insurance, with an emphasis on protecting policyholder data.
- Ease of Business for Intermediaries: One-time registration for insurance agents and intermediaries will be introduced to simplify operations.
- Operational Autonomy for LIC: The Life Insurance Corporation (LIC) will have more freedom to expand zonal offices and manage international operations independently.
- Higher Shareholding Thresholds: The requirement for IRDAI approval on share transfers will now apply only to stakes above 5% of paid-up equity capital, up from the previous 1%.
- SOP for Regulation Making: A Standard Operating Procedure will be set for IRDAI to streamline its rule-making process.
What It Means for Investors
This reform creates a new window of opportunity for investors looking to participate in the growth of India’s insurance space. By enabling 100% FDI, the government is inviting long-term, stable capital. Which could potentially improve efficiency, innovation, and product access.
It also aligns with larger financial sector trends we’ve covered in our Lakshmishree blog insurance-linked mutual fund investments, as these areas become more appealing for both domestic and international investors.
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