Delhi: December 18:
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, has been passed by Parliament on December 17. The bill amends three Acts related to the insurance sector, namely, The Insurance Act, 1938, The Life Insurance Corporation Act, 1956, and The Insurance Regulatory and Development Authority Act, 1999.
One of the key features of the bill is the allowance of up to 100% foreign direct investment in Insurance Companies, opening the door to more foreign players in India. This will help with capital augmentation, the adoption of advanced technology, the implementation of global best practices, and the creation of additional employment opportunities. Increased competition would drive efficiency in products and services, benefiting citizens.
Ease of Doing Business is being promoted for intermediaries by introducing one-time licensing and the option to suspend the license rather than cancel it immediately.
For insurers, the limit on seeking prior regulatory approval for the transfer of share capital has been raised from 1% to 5%, and the Net Owned Fund requirement for Foreign Reinsurance Branches has been reduced from Rs 5,000 Crore to Rs 1,000 Crore.
LIC has been provided autonomy to open Zonal offices in the country and to align its foreign offices with the laws and regulations of their respective jurisdiction.
To protect Policyholders’ interests, a dedicated fund, the Policyholders’ Education and Protection Fund, will be established to raise awareness of insurance. Policyholders’ data must now be collected and protected in accordance with the DPDP Act 2023.
Regulatory governance is being strengthened by introducing standard operating procedure for regulation making and mandating the process consultative. IRDAI is being empowered to recover wrongful gains from insurers and intermediaries. Penalties are being rationalised, and factors for imposing penalties are being introduced.
The reforms are aimed at extending insurance coverage to people, households, and enterprises, deepening it, improving ease of doing business, and strengthening regulatory oversight and governance. All these measures would strengthen the Indian insurance sector and provide financial resilience to the Indian economy.
