New Delhi

Finance Minister Nirmala Sitharaman on Tuesday introduced the Insurance Laws (Amendment) Bill, 2025 in the Lok Sabha, seeking to strengthen policyholder protection, deepen insurance penetration and accelerate growth in the sector.

Titled ‘Sabka Bima Sabki Raksha’, the Bill proposes amendments to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. The proposed changes align with the government’s vision of achieving ‘Insurance for All by 2047’ and improving ease of doing business.

A key provision of the Bill is the proposal to raise the foreign direct investment (FDI) limit in insurance companies from 74 per cent to 100 per cent, aimed at attracting long-term foreign capital, facilitating technology transfer and expanding insurance coverage across the country.

To enhance consumer protection, the Bill provides for the creation of a Policyholders’ Education and Protection Fund, focused on improving insurance awareness and safeguarding policyholder interests. It also proposes to empower IRDAI to disgorge wrongful gains, enabling the regulator to recover illegal or unfair profits made by insurers or intermediaries.

The Bill lays down a legal framework for the use of digital public infrastructure in the insurance sector, with safeguards for data security, privacy and cybersecurity, to support innovation while protecting policyholder information.

To ease business operations, the proposed amendments provide for one-time registration for insurance intermediaries. The threshold for seeking IRDAI approval for the transfer of shares in insurance companies is also proposed to be increased from 1 per cent to 5 per cent of paid-up equity capital.

The reinsurance sector is expected to receive a boost, with the Bill proposing a reduction in the net owned fund requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, facilitating the entry of more global players and strengthening domestic reinsurance capacity.

The Bill also grants greater operational autonomy to the Life Insurance Corporation of India (LIC), allowing it to set up zonal offices and align its overseas operations with local laws and regulations.

Further, the amendments propose a standard operating procedure for regulation-making under the IRDAI Act and a transparent framework for levying penalties, with clearly defined guiding factors.

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The government said the Bill is expected to expand insurance coverage, bring more citizens under the social security net and encourage greater participation by insurers, agents and intermediaries.