Sabko Bima Sabko Raksha (Amendment of Insurance Laws) Bill, 2025

Why in news?

Lok Sabha has passed the insurance bill seeking to remove the Foreign Direct Investment (FDI) cap, along with over a dozen key sectoral reforms.

• Aim – To liberalise, modernise & democratize India’s insurance sector.
• It ensures wider coverage, stronger regulation, and better consumer protection while opening the doors to global investment and expertise.
• Amended laws – Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

Key Provisions of the Bill

• FDI Increase – It raises the foreign investment cap in insurance from 74% to 100%, to attract investment, facilitate technology transfer, increase insurance penetration and social protection.

FDI limit for insurance companies was raised from 26% to 49% in 2015 and from 49% to 74% in 2021 and now it is 100%.

• Regulated by– It grants IRDAI authority to expel wrongful gains from insurers and intermediaries, strengthening consumer protection.
• Autonomy to LIC – It gives LIC greater operational freedom, empowering it to set up new zonal offices without requiring prior government approvals, enabling faster expansion, improved administrative efficiency, and better regional oversight.
• Penalty Rationalisation – The maximum penalty on insurance intermediaries increased from Rs 1 crore to Rs 10 crore, aimed at serving as a strong deterrent and promoting adherence to legal and regulatory norms.
• Reinsurance Reform – It reduces the net owned fund requirement for foreign reinsurance branches from Rs 5,000 crore to Rs 1,000 crore, encouraging more reinsurers to operate in India.
• Public Sector Support – The government’s priority is to reinforce public sector insurance firms, noting that Rs 17,450 crore has been injected into three state‑owned general insurers to bolster their capital base.
• Sectoral Growth Data –
  • Number of insurers - Increased from 53 (2014–15) to 74 (2024–25).
  • Total insurance premium mobilised - During the same period went up from Rs 4.15 lakh crore to Rs 11.93 lakh crore.
  • Assets under management (AUM) - Increased from Rs 24.20 lakh crore to Rs 74.43 lakh crore.

References

1. The Hindu | LS passes bill on insurance sector
2. Indian Express | LS passes Bill to raise FDI limit in insurance sector