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On 17 December 2025, the Parliament passed Sabka Bima Sabki Raksha Amendment of Insurance Laws Bill 2025. This bill changes three Acts pertaining to the Insurance sector: (i) The Insurance Act of 1938, (ii) The Life Insurance Corporation Act of 1956, and (iii) The Insurance Regulatory and Development Authority Act of 1999.
A key feature of the bill is the allowance of up to 100% Foreign Direct Investment (FDI) in insurance companies. This change opens the door for more foreign players to enter the Indian market. It will help to enhance overall capital availability, facilitate the adoption of advanced technology and introduce global best practices.
In addition to this, the Bill is anticipated to create more employment opportunities in the insurance sector. Increased competition in the sector will propel efficiency in products and services and ultimately benefit the consumers.
Through the introduction of one-time licensing provision and suspension of license rather than straight away cancellation provision, the ease of doing business is being promoted for the intermediaries in the insurance sector.
For insurers, the limit for seeking prior regulatory approval for the transfer of share capital has been increased from earlier 1% to 5% now. Additionally, the Net Owned Fund requirement for Foreign Reinsurance Branches has been reduced from previous Rs 5,000 Crore to Rs 1,000 Crore now.
The Life Insurance Corporation (LIC) has been granted the autonomy to establish zonal offices across the country and to align its foreign offices with the laws and regulations of their respective jurisdictions. To protect the interests of policyholders, a dedicated fund called the Policyholders’ Education and Protection Fund will be established to promote awareness about insurance.
Furthermore, policyholder data will now be required to be collected and protected in accordance with the Digital Personal Data Protection Act of 2023. Regulatory governance is being strengthened by introducing a standard operating procedure for regulation-making, which mandates a consultative process.
The Insurance Regulatory and Development Authority of India will be empowered to recover wrongful gains from insurers and intermediaries. Additionally, penalties are being rationalized and specific factors for imposing penalties are being introduced.
The reforms aim to extend insurance coverage to people, households and enterprises across the country, provide ease of doing business for the insurance intermediaries and improve regulatory oversight as well as governance. All of these measures would strengthen the insurance sector and provide financial resilience to the economy of India.
Source: Press Information Bureau (PIB)
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