The Indian Parliament has passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, permitting 100% Foreign Direct Investment (FDI) in the insurance sector. The Rajya Sabha approved the bill on December 17, 2025, a day after it was passed by the Lok Sabha. This landmark decision aims to increase insurance penetration, reduce premiums, and generate employment opportunities within the sector.
The bill amends key legislations governing the insurance industry, including the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. The government intends to modernize regulations, improve governance, and strengthen consumer protection mechanisms through these amendments.
Finance Minister Nirmala Sitharaman stated that increasing the FDI limit to 100% would encourage more foreign companies to invest in India, as many find it challenging to locate suitable joint venture partners. With increased participation, competition is expected to rise, leading to lower premiums for policyholders.
The bill includes a safeguard that requires at least one top executive position, such as Chairman, Managing Director, or CEO, to be held by an Indian citizen to ensure domestic oversight. The enhanced powers granted to IRDAI are intended to improve transparency, ensure compliance, and better protect the interests of policyholders, mirroring the enforcement framework used by SEBI.
The government anticipates that allowing 100% FDI will attract more global insurance players to India, intensifying competition and benefiting customers through lower premiums, improved policy features, and a broader selection of insurance products across health, life, and general insurance. New players are also expected to tap into underserved rural markets and niche segments like crop and cyber insurance to gain market share, promoting financial inclusion.
During the Rajya Sabha debate, the opposition demanded the bill be sent to a select committee of Parliament for further review, citing the significant impact on the insurance sector. Concerns were raised about the potential for privatization of the state-backed Life Insurance Corporation (LIC). Sitharaman clarified that LIC's statutory strength remains intact and its business is flourishing. She noted LIC's total business stood at ₹55.52 lakh crore, an all-time high, with its solvency ratio increasing to 2.21 from 1.98.
The Finance Minister addressed concerns about job displacement, assuring that the bill would generate more employment opportunities, particularly for students of actuarial sciences. Removing the FDI cap is expected to attract global capital and expertise, boosting ancillary activities like technology infusion.
The passage of the Sabka Bima Sabki Raksha Bill signifies a major step towards liberalizing the insurance sector, aligning India with global standards, and achieving the vision of "Insurance for All by 2047".
