Sabka Bima Sabki Raksha Bill 2025 Tabled, Paving Way for Major Insurance Reforms

Finance Minister Nirmala Sitharaman on Tuesday introduced the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 in the Lok Sabha, marking a major overhaul of India’s insurance framework. The bill proposes sweeping amendments to the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999, with the headline reform being the increase of the foreign direct investment (FDI) limit in insurance companies from 74% to 100%, allowing full foreign ownership.

The reform, first announced in the Union Budget earlier this year, aims to accelerate financial sector liberalisation and attract global capital into the insurance industry. With over ₹82,000 crore already invested through FDI, the government expects the move to draw international insurers, boost competition, and improve insurance penetration in India, which currently has a relatively small number of insurers compared to global markets. Safeguards remain, including a requirement that at least one key managerial position—chairperson, managing director, or CEO—must be held by an Indian citizen.

Beyond FDI, the bill introduces several regulatory and structural changes, including easing entry norms for foreign reinsurers, strengthening IRDAI’s enforcement powers, and granting greater operational flexibility to LIC. It also proposes the creation of a Policyholders’ Education and Protection Fund to safeguard consumer interests and updates leadership tenure norms at IRDAI. Together, these measures are expected to modernise regulation, improve governance, and strengthen India’s insurance ecosystem.

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