In order to improve policyholder protection, increase insurance penetration, and hasten the expansion of the insurance industry in the nation, Finance Minister Nirmala Sitharaman introduced the Insurance Laws (Amendment) Bill, 2025, also known as “Sabka Bima Sabki Raksha” in the Lok Sabha. The Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act of 1999 are among the important laws that the Bill aims to modify.
The government’s long-term goals of attaining “Insurance for All by 2047” and enhancing the sector’s ease of doing business are in line with the suggested changes. The proposal to increase the foreign direct investment (FDI) cap in Indian insurance companies from the current 74% to 100% is one of the bill’s main features. According to the government, the action is meant to improve insurance penetration and social security coverage nationwide, draw in steady, long-term foreign investment, and enable technological transfer.
To enhance consumer protection, the Bill suggests creating a Policyholders’ Education and Protection Fund to improve insurance awareness. It proposes granting IRDAI the authority to recover wrongful gains from insurers and intermediaries, thereby strengthening regulatory oversight. Additionally, it offers a legal framework for digital public infrastructure in the insurance sector, emphasizing data security and privacy. The Bill aims to simplify operations for insurance intermediaries through one-time registration and raises the IRDAI approval threshold for share transfers from 1% to 5%.
It also proposes reducing the Net Owned Fund requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, encouraging global reinsurer participation and bolstering domestic reinsurance capacity.
