Finance Minister Nirmala Sitharaman has introduced the Insurance Laws (Amendment) Bill, 2025, in the Lok Sabha, signaling a major push to modernize India’s insurance sector under the vision of “Sabka Bima Sabki Raksha.” The bill aims to expand insurance coverage, strengthen policyholder protection, and simplify business processes to support the goal of “Insurance for All by 2047.” A key reform is the increase in the foreign direct investment cap from 74 percent to 100 percent, which is expected to attract global insurers, bring in advanced technology, and boost competition, potentially making insurance more affordable and accessible, especially in rural areas.

The legislation also lowers the net owned fund requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore, helping strengthen domestic reinsurance capacity amid growing climate-related risks. To protect consumers, the bill proposes a Policyholders’ Education and Protection Fund, enhances IRDAI’s powers to recover unfair gains from insurers, and sets clearer rules to curb unfair practices. It also provides a secure framework for digital operations, balancing innovation with data privacy.

Operational reforms include one-time registration for intermediaries instead of repeated renewals, relaxed thresholds for regulatory approval of share transfers, and greater operational flexibility for LIC, including in overseas operations. Together, these changes are expected to improve efficiency, expand insurance penetration, and support economic growth. For consumers, the reforms promise broader coverage, better safeguards, and a more robust insurance ecosystem aligned with India’s long-term development goals.