Parliament on Wednesday passed a Bill to raise foreign direct investment (FDI) in the insurance sector to 100 per cent from the existing 74 per cent, a move aimed at boosting insurance penetration, lowering premiums and creating more jobs.
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was approved by the Rajya Sabha through a voice vote, a day after it cleared the Lok Sabha. The House rejected Opposition amendments, including a proposal to refer the Bill to a parliamentary panel.
Replying to the debate, Finance Minister Nirmala Sitharaman said the changes would allow foreign insurers to bring in greater capital and strengthen the sector. She noted that since 2014, the government has undertaken major insurance reforms to expand coverage for individuals, businesses and agriculture.The minister said opening up the sector has already improved insurance penetration, but significant scope for growth remains.
Raising the FDI cap to 100 per cent would attract more foreign players, many of whom are unable to find joint venture partners under the current framework, she added.Sitharaman expressed confidence that increased competition would lead to lower premiums and dismissed concerns about job losses. On the contrary, she said employment in the sector has nearly tripled, with the number of employees, agents and micro-agents rising to 88.17 lakh in 2024–25 from 30.14 lakh in 2014–15.
Refuting claims that the Bill was rushed, Sitharaman said it followed nearly two years of consultations. Addressing concerns over profit repatriation, she said strict IRDAI norms—such as maintaining a minimum solvency ratio of 1.5 and provisioning for all liabilities—ensure adequate safeguards for policyholders.She also highlighted the active participation of private insurers in government schemes such as Jan Suraksha programmes and the PM Fasal Bima Yojana, with over 20 crore people enrolled under PMJJBY and PMSBY by private players.The finance minister assured that the amendments would not dilute the statutory status of LIC, saying the public sector insurer continues to enjoy public trust. LIC’s assets under management rose 6.45 per cent to ₹54.52 lakh crore in 2024–25, while its solvency margin improved to 2.11.
The Bill amends the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999. It also allows the merger of non-insurance companies with insurance firms, sets up a Policyholders’ Education and Protection Fund, improves ease of doing business, and enhances regulatory oversight.
The amendments also revise the tenure of the IRDAI chairperson and whole-time members to five years or until the age of 65, whichever is earlier.