Parliament Clears Bill Permitting 100% Foreign Investment in Insurance
New Delhi: Parliament has approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, paving the way for 100% Foreign Direct Investment (FDI) in the insurance sector. The Rajya Sabha passed the bill on Wednesday, following its approval by the Lok Sabha a day earlier.
Finance Minister Nirmala Sitharaman said the reforms would attract global insurers, intermediaries, and service providers, helping expand the insurance market and generate new employment opportunities. She assured lawmakers that strong regulatory safeguards are in place to protect policyholders.
According to the minister, the Insurance Regulatory and Development Authority of India (IRDAI) mandates a minimum solvency ratio of 1.5 for all insurers, meaning companies must hold assets at least 1.5 times their liabilities. Insurers are also required to account for unreported and under-reported claims before declaring profits.
Highlighting the performance of Life Insurance Corporation (LIC), Sitharaman said its assets under management rose to ₹54.52 lakh crore in FY 2024–25, while its solvency margin improved to 2.11. LIC also recorded growth in new business value during the year.
Addressing concerns over job losses, the minister said opening up the sector would deepen the market, create fresh opportunities for agents and intermediaries, and lead to net employment growth. She added that the bill was drafted after extensive consultations with states, industry stakeholders, regulators, and the public.
The legislation raises the FDI cap in insurance companies from 74% to 100%, reduces capital requirements for foreign reinsurers, and broadens the definition of insurance intermediaries. It also amends several existing laws, including the Insurance Act, 1938, and the IRDAI Act, 1999.
Sitharaman said the changes align with the government’s long-term goal of achieving “Insurance for All by 2047” and improving ease of doing business, while ensuring transparency and stronger regulatory oversight.
Opposition members criticised the bill, arguing it prioritises corporate interests over policyholder protection. The government, however, maintained that the reforms balance capital inflow with consumer safeguards.
