FM Sitharaman Introduces Insurance Law Amendment Bill, Proposes 100% FDI

New Delhi, Dec 16: The Lok Sabha on Tuesday introduced the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, aimed at modernising India’s insurance regulatory framework and expanding coverage across the country.

The Bill was moved for introduction by Union Finance Minister Nirmala Sitharaman following its approval by the Union Cabinet ahead of the Winter Session of Parliament.

It proposes amendments to 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 objective of strengthening regulation, promoting sectoral growth and enhancing consumer protection.

A key provision of the Bill is the proposal to raise the foreign direct investment (FDI) cap in Indian insurance companies from 74 per cent to 100 per cent. The move is expected to attract greater foreign capital, increase competition, facilitate technology adoption and support the government’s goal of ‘Insurance for All by 2047’.

The Bill also lowers the Net Owned Funds requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, a step aimed at widening participation beyond the public sector General Insurance Corporation and boosting reinsurance capacity and risk diversification.

Under the proposed law, IRDAI will be granted disgorgement powers to recover wrongful gains, aligning its enforcement authority with market regulators such as SEBI. It introduces a one-time registration process for insurance intermediaries, raises the approval threshold for equity transfers from 1 per cent to 5 per cent, and mandates standard operating procedures for regulation-making to enhance transparency.

The Bill further empowers LIC to open new zonal offices without prior government approval, allowing faster expansion and operational efficiency. It also enables restructuring of LIC’s overseas operations in line with host-country laws to strengthen global competitiveness.

While the Bill brings far-reaching reforms, certain industry demands, including the introduction of a composite licence, have been excluded or diluted, leading to mixed responses from stakeholders. The proposed legislation is expected to be debated extensively in Parliament in the coming sessions. (Agencies)