**Executive Summary**
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, was passed by Parliament on December 17, 2025. The bill amends three acts related to the insurance sector, allowing up to 100% Foreign Direct Investment (FDI) in insurance companies, decreasing Net Owned Funds for foreign reinsurance branches and increasing ease of doing business. The goal is to deepen insurance coverage, promote regulatory oversight and governance, and improve the Indian insurance sector.
**Key Points / Main Content**
* **FDI and Capital Augmentation:**
* Allows up to 100% Foreign Direct Investment (FDI) in insurance companies.
* Facilitates capital augmentation and adoption of advanced technology.
* Encourages global best practices in the insurance sector.
* **Net Owned Fund Requirement:**
* Reduces Net Owned Fund requirement for Foreign Reinsurance Branches from ₹5,000 Crore to ₹1,000 Crore.
* **Policyholder Protection:**
* Establishes a dedicated Policyholders' Education and Protection Fund to spread insurance awareness.
* Requires policyholders' data collection and protection in alignment with DPDP Act 2023.
* **Ease of Doing Business:**
* Promotes ease of doing business for intermediaries through one-time licensing and suspension of licenses instead of immediate cancellation.
* Increases the limit of seeking prior regulatory approval for transfer of share capital from 1% to 5%.
* **Regulatory Governance:**
* Strengthens regulatory governance by introducing standard operating procedures for regulation making and mandating consultative processes.
* Grants IRDAI the power to disgorge wrongful gains from insurers and intermediaries.
* Rationalizes penalties and factors for imposing them.
* **LIC Autonomy**
* LIC has been provided autonomy to open Zonal offices in the country and to align its foreign offices with the laws and regulations of their respective jurisdiction.
**Impact Analysis**
**Insurance Companies (including Foreign Reinsurance Branches)**
* **Impact:** Potential for increased foreign investment, reduced capital requirements, and the need to adapt to new regulatory norms.
* **Action Required:** Prepare for potential FDI opportunities, adjust capital strategies, and align with new regulatory procedures.
**Policyholders**
* **Impact:** Enhanced protection through the Policyholders' Education and Protection Fund, potential for better products and services due to increased competition, and new data protection measures.
* **Action Required:** Be aware of the educational resources available and understand the updated data protection policies.
**Insurance Intermediaries**
* **Impact:** Easier licensing procedures and potential for greater regulatory oversight, and risk of penalties.
* **Action Required:** Understand the new licensing provisions and ensure compliance with regulations.
**IRDAI (Insurance Regulatory and Development Authority of India)**
* **Impact:** Expanded powers and responsibilities for regulatory oversight and enforcement.
* **Action Required:** Implement the new regulatory procedures and exercise the expanded enforcement powers.
**Life Insurance Corporation (LIC)**
* **Impact:** Increased autonomy in establishing Zonal offices, and need to align foreign offices with relevant jurisdiction laws.
* **Action Required:** Establish Zonal offices in the country and align foreign offices with relevant jurisdiction laws.
Key Entities Referenced
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025: Bill passed by Parliament allowing up to 100% FDI in insurance companies and amending existing insurance laws.
Insurance Act, 1938: One of the acts amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025.
The Life Insurance Corporation Act, 1956: One of the acts amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025.
The Insurance Regulatory and Development Authority Act, 1999: One of the acts amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025.
Policyholders' Education and Protection Fund: A dedicated fund to spread awareness about insurance amongst policyholders.
Ministry of Finance
The Sabka Bima Sabki Raksha (Amendment of
Insurance Laws) Bill, 2025 passed by Parliament;
allows up to 100% FDI in insurance companies
The Bill to deepen insurance coverage, provide ease of doing
business and improve regulatory oversight and governance
Capital augmentation, adoption of advanced technology and
global best practices in insurance sector to be leveraged
Increased competition to drive efficiency in products and
services for citizens
Net Owned Fund requirement of Foreign Reinsurance
Branches reduced from 5,000 Cr to 1,000 Cr
Policyholders’ Education and Protection Fund, a dedicated
fund to spread awareness about insurance amongst
policyholders
प्रव तथ: 18 DEC 2025 5:15PM by PIB Delhi
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 has been passed by Parliament
on 17.12.2025. The bill amends three Acts related to Insurance sector, namely, The Insurance Act,1938,
The Life Insurance Corporation Act, 1956 and The Insurance Regulatory and Development Authority Act,
1999.
One of the key features of the bill is to allow up to 100% Foreign Direct Investment in Insurance
Companies, opening doors to more foreign players to India. This will help in capital augmentation,
adoption of advanced technology and bringing global best practices along with increasing employment
opportunities. Increased competition would drive efficiency in products and services proving beneficial
for the citizens.
Ease of Doing business is being promoted for intermediaries through the introduction of provision of one-
time licensing and the provision of suspension of license rather than straight away cancellation. For
insurers, the limit of seeking prior regulatory approval for transfer of share capital has been raised from
1% to 5%, the Net Owned Fund requirement of Foreign Reinsurance Branches has been reduced from Rs
5,000 Crore to Rs 1,000 Crore. LIC has been provided autonomy to open Zonal offices in the country and
to align its foreign offices with the laws and regulations of their respective jurisdiction.To protect the interest of Policyholders, a dedicated fund, namely Policyholders’ Education and Protection
Fund will be set up to spread awareness about insurance. Policyholders’ data would now be required to be
collected and protected in alignment with DPDP Act 2023.
Regulatory governance is being strengthened by introducing standard operating procedure for regulation
making and mandating the process consultative. IRDAI is being given the power to disgorge wrongful
gains from insurers and intermediaries. Penalties are being rationalised and factors for imposition of
penalties are being introduced.
The reforms are aimed at extending insurance coverage to people, households and enterprises, deepening
insurance coverage, providing ease of doing business, improving regulatory oversight and governance. All
these measures would lead to strengthening of Indian insurance sector to provide financial resilience to
Indian economy.
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