GG News Bureau
New Delhi, 13th Dec: The Union Cabinet on Friday approved a landmark proposal to increase foreign direct investment (FDI) in the insurance sector to 100 per cent, paving the way for one of the most ambitious reforms in the financial services landscape, according to sources. The move aims to significantly expand insurance penetration and attract global capital into India’s fast-growing insurance market.
The Insurance Laws (Amendment) Bill, 2025, which is listed among the 13 legislations scheduled for consideration in the ongoing winter session of Parliament, is expected to be introduced on Monday. The session runs until December 19.
The proposal stems from Finance Minister Nirmala Sitharaman’s Budget announcement earlier this year, where she outlined second-generation financial reforms and proposed raising the FDI cap from 74 per cent to 100 per cent.
So far, the insurance sector has received about ₹82,000 crore in FDI. The new bill seeks to amend key laws—including the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999—to enhance efficiency, strengthen policyholder protection and ease operational processes.
Key Provisions Under the Proposed Bill
The amendments will allow full foreign ownership of insurance companies while incorporating safeguards. At least one among the insurer’s top leadership—the Chairperson, Managing Director or CEO—must be an Indian citizen. The Cabinet has also opted to retain existing net-worth requirements for insurers.
The bill further proposes mechanisms such as a dedicated policyholder fund, provisions allowing non-insurance companies to merge with insurers, and greater operational autonomy for the LIC board—covering decisions related to recruitment and branch expansion.
Officials said the reforms will support the broader goal of Insurance for All by 2047, by enabling more players, increasing competition, fostering innovation and generating employment.
Industry Reaction
Industry leaders welcomed the reform as a step likely to accelerate investment flows and enhance India’s global appeal as an insurance market.
Aditya Birla Sun Life Insurance MD & CEO Kamlesh Rao said the clarity on ownership norms may encourage more global players to consider India seriously, though success would depend on navigating India’s complex distribution ecosystem.
Deloitte India Partner Debashish Banerjee noted that several global insurers have already shown interest in India, and the reform will help advance such discussions.
Grant Thornton Bharat Partner Narendra Ganpule said the move is designed with policyholders at its core, aiming to enhance competition, product choice and service standards.
RenewBuy CEO Balachander Sekhar added that allowing 100 per cent FDI would bolster the inflow of global capital and expertise into India’s insurance ecosystem.
If passed by Parliament, the bill is expected to usher in transformative changes in the insurance industry, widen coverage, and strengthen India’s financial inclusion agenda.
