New Delhi: Parliament on Wednesday approved legislation permitting up to 100 percent foreign direct investment in the insurance sector, marking a major reform aimed at expanding coverage, attracting global capital, and strengthening competition. The Sabka Bima Sabki Raksha Amendment of Insurance Laws Bill 2025 was cleared by the Rajya Sabha through a voice vote, a day after receiving approval from the Lok Sabha.
The House rejected amendments moved by Opposition members, including proposals seeking referral of the bill to a parliamentary committee for further examination. Responding to the debate, the Finance Minister said the reform would enable foreign insurers to bring in higher levels of capital and technology, helping the sector grow faster and reach more people.
The minister highlighted that opening up the insurance sector over the years has already led to a steady rise in insurance penetration, while significant untapped potential still remains. She said the move to allow 100 percent foreign investment would encourage more global insurers to enter the Indian market, particularly those who have been reluctant to operate through joint ventures due to partnership constraints.
With the expected entry of additional players, competition in the sector is likely to intensify, which could lead to improved products and lower premiums for consumers. Addressing concerns related to employment, the minister said the reform would generate more jobs rather than reduce them. She pointed to data showing that employment in the insurance sector has nearly tripled since the foreign investment cap was raised from 26 percent to 74 percent.
The government also dismissed claims that the bill was rushed, stating that consultations on the proposed changes had been ongoing for nearly two years. The legislation introduces amendments to key laws governing the sector, including the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.
In addition to raising the foreign investment limit, the bill allows the merger of non insurance companies with insurance firms and seeks to accelerate overall sector growth. A key provision includes the creation of a Policyholders’ Education and Protection Fund, aimed at safeguarding consumer interests and improving awareness.
The reform is expected to play a significant role in strengthening India’s insurance ecosystem while enhancing protection and choice for policyholders.
Sorry, there was a YouTube error.
