Parliament clears bill for 100% foreign investment in insurance sector
What's the story
The Rajya Sabha has approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025. The legislation seeks to amend the Insurance Act of 1938, Life Insurance Corporation Act of 1956 and Insurance Regulatory and Development Authority Act of 1999. It proposes increasing the foreign direct investment (FDI) limit in the insurance sector from 74% to 100%.
Objectives
Bill aims to boost insurance coverage and facilitate mergers
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, aims to provide insurance coverage for all by 2047. It also intends to facilitate mergers between non-insurance companies and insurance firms. Finance Minister Nirmala Sitharaman said the amendments would allow foreign companies to invest more capital in the sector, thereby increasing competition and potentially lowering premiums.
Employment concerns
Impact on employment and insurance penetration
Sitharaman also addressed concerns about job losses due to the bill, asserting that it would actually create more employment opportunities. She cited data showing that jobs in the sector have nearly tripled since the FDI limit was raised from 26% to 74%. The bill is expected to boost India's insurance penetration rate, which fell to 3.7% in FY24 from 4% in FY23.
Consumer protection
It establishes policyholders' education and protection fund
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, also proposes the establishment of a Policyholders's Education and Protection Fund. This fund will be set up to protect the interests of policyholders. The bill is also expected to improve ease of doing business for insurance companies, intermediaries and other stakeholders by bringing transparency to regulation-making and enhancing regulatory oversight over the sector.