Lok Sabha Clears Insurance Bill: FDI Cap Raised, Policyholder Safeguards Strengthened

New Delhi: The Lok Sabha on Tuesday passed a bill that aims to strengthen policyholder protection, accelerate the growth of the insurance sector and raise the limit of FDI in the insurance sector from 74 per cent to 100 per cent.

‘The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025’ seeks to amend key legislations, including the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999.

Replying to a debate on the Bill in the Lok Sabha, Finance Minister Sitharaman said the government wants the regulators to be more robust.  Opposition parties strongly opposed the bill.

She said the proposed amendments are aligned with the government's long-term vision of achieving 'Insurance for All by 2047' and improving ease of doing business in the sector.

“We want the regulator also to be more robust and taken measures around this in the amendment Bill ranging from better regulatory oversight, ease of compliance, insurance intermediaries to provide uninterrupted services, and so on,” Sitharaman said.

“We are also treating both intermediaries and insurance companies with a lot more standardized approach so that whenever they do anything, they will have to have a stakeholder consultation before they bring in any policy,” she added.  

The Finance Minister said that under the new arrangement, all the insurance companies and the intermediaries need to put the word “insurance” in their name for a better clarity of the customers.

“We are introducing  suspension of intermediary license  instead of direct cancellation  because  that will provide time for compliance and allow the intermediary an opportunity  to strategize, streamline operations, bring in greater transparency.”

The Bill proposes to raise the Foreign Direct Investment (FDI) limit in Indian insurance companies from the existing 74 per cent to 100 per cent.

She said the move is intended to attract stable, long-term foreign capital, facilitate technology transfer, and enhance insurance penetration and social security coverage across the country.