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

Finance Minister Nirmala Sitharaman on Tuesday introduced the Insurance Laws (Amendment) Bill, 2025, titled “Sabka Bima Sabki Raksha” in the Lok Sabha, proposing a 100 per cent Foreign Direct Investment (FDI) in the insurance sector, from the existing 74 per cent.

Sitharaman said that the Bill aims to strengthen policyholder protection, deepen insurance penetration and accelerate the growth of the insurance sector in the country.

Insurance Laws Bill, 2025: Key Amendments

• The Insurance Laws (Amendment) Bill aims to amend the following legislations: the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999.
• 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, said the Finance Minister.
• She also highlighted that a 100% FDI in the insurance sector is “intended to attract stable, long-term foreign capital, facilitate technology transfer, and enhance insurance penetration and social security coverage” across the country.
• The Bill proposes the establishment of a Policyholders' Education and Protection Fund, which will focus on enhancing insurance awareness and safeguarding the interests of policyholders.

• The Finance Minister also proposed granting IRDAI the authority to disgorging wrongful gains, enabling the regulator to recover illegal or unfair gains made by insurers and intermediaries.
• She said that the amendment bill provides a legal framework digital public infrastructure in the insurance sector, with a focus on securing and protecting policyholder data.
• The Bill proposes one-time registration for insurance intermediaries to improve the ease of business operations and ensure uninterrupted customer services.
• It provides greater operational autonomy to the state-owned Life Insurance Corporation of India (LIC), enabling it to establish zonal offices and align its overseas operations.

• The threshold for seeking IRDAI approval for the transfer of shares in insurance companies is proposed to be raised from the current 1% to 5% of the paid-up equity capital.
• The Bill is expected to expand insurance coverage, bring more citizens under the insurance security net.
• It also proposes the introduction of a Standard Operating Procedure (SOP) for regulation-making under the IRDAI Act.