New Delhi

The Lok Sabha on Tuesday approved a comprehensive legislation aimed at enhancing policyholder safeguards, boosting the expansion of the insurance industry, and increasing the foreign direct investment (FDI) ceiling in the sector from 74 per cent to 100 per cent.

Titled The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, the legislation proposes amendments to major insurance-related laws, 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 the debate in the House, Finance Minister Nirmala Sitharaman said the reforms are designed to strengthen regulatory institutions while ensuring faster and more inclusive growth of the insurance ecosystem. The Bill, however, faced stiff opposition from several Opposition parties.

Sitharaman said the amendments are in line with the government’s long-term objective of achieving “Insurance for All by 2047” and simplifying business operations in the sector.

“Our intent is to make the regulator more resilient and effective. The amendments provide for stronger oversight, simplified compliance norms, uninterrupted services by insurance intermediaries, and other systemic improvements,” the Finance Minister said.

She added that both insurance companies and intermediaries would now be subject to a more uniform regulatory framework, including mandatory stakeholder consultations before introducing any new policy measures.

To improve transparency for consumers, Sitharaman said the Bill requires all insurance companies and intermediaries to include the word “insurance” in their official names.

The legislation also introduces a provision for suspension of intermediary licences instead of immediate cancellation. According to the Finance Minister, this approach would give entities sufficient time to address shortcomings, comply with regulations, and improve operational transparency.

One of the key provisions of the Bill is the proposal to allow 100 per cent FDI in Indian insurance companies, up from the current cap of 74 per cent.

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Sitharaman said the higher FDI limit is expected to attract long-term foreign investment, promote technology infusion, expand insurance coverage, and strengthen social security across the country.