The Union Cabinet approved a significant change in India’s insurance rules on Friday by allowing full foreign ownership in insurance companies. This decision attract more capital, boost competition, and improve customer services in the sector.
Cabinet will introduce New Insurance Bill 2025 in winter session
The Insurance Laws (Amendment) Bill 2025 will introduced during the current Winter session of Parliament, ending on December 19. A Lok Sabha bulletin lists it among the main legislative items for discussion.
Finance Minister Nirmala Sitharaman previously proposed increasing the foreign investment limit from 74% to 100% as part of broader reforms in the financial sector.
Key Changes Proposed Under the Reform
The finance ministry has suggested several key changes to modernize the insurance sector. These include increasing the FDI limit to 100%, reduces paid-up capital requirements to help new companies enter the market. It creates a composite license system that allows insurers to offer multiple products in one place.
The government also plans to give the LIC board more operational powers, especially regarding opening new branches and hiring staff. Cabinet will introduce changes to the Insurance Act 1938 and the IRDAI Act 1999 to support the larger reform package.
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