Lok Sabha: FM Nirmala Sitharaman introduces bill proposing 100% FDI in insurance sector

December 16, 2025

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday introduced the Insurance Laws (Amendment) Bill, 2025, titled “Sabka Bima Sabki Raksha”, in the Lok Sabha.

The Bill proposes increasing Foreign Direct Investment (FDI) in the insurance sector from 74% to 100%, aiming to strengthen policyholder protection, boost insurance penetration, and accelerate the growth of the sector.

Key Amendments Proposed

The Insurance Laws (Amendment) Bill seeks to amend the following legislations:

• Insurance Act, 1938

• Life Insurance Corporation Act, 1956

• Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999

The proposed changes are aligned with the government’s vision of “Insurance for All by 2047” and aim to improve the ease of doing business in the sector.

100% FDI in Insurance Sector

The Finance Minister highlighted that allowing 100% FDI is intended to:

• Attract stable, long-term foreign capital

• Facilitate technology transfer

• Enhance insurance penetration and social security coverage across India

Policyholders’ Education and Protection Fund

The Bill proposes the establishment of a Policyholders’ Education and Protection Fund, aimed at:

• Raising insurance awareness

• Safeguarding the interests of policyholders

Strengthening Regulatory Powers

The amendments grant IRDAI enhanced powers, including:

• Disgorging wrongful gains to recover illegal or unfair profits made by insurers and intermediaries

• Introducing a legal framework for digital public infrastructure to ensure the security and protection of policyholder data

Ease of Business for Intermediaries

To improve operations and service continuity, the Bill proposes:

• One-time registration for insurance intermediaries

• Greater operational autonomy for LIC, including the ability to establish zonal offices and manage overseas operations

• Raising the approval threshold for share transfers in insurance companies from 1% to 5% of paid-up equity capital

Focus on Expanding Coverage

The amendments are expected to:

• Expand insurance coverage across the country

• Bring more citizens under the insurance safety net

• Introduce a Standard Operating Procedure (SOP) for regulation-making under the IRDAI Act