The Union Cabinet approved the Insurance Laws (Amendment) Bill, 2025, on Friday. It allows the Bill to introduced in the Lok Sabha during the Winter Session of Parliament. The Bill included in the Lok Sabha bulletin along with other important legislation for discussion. This approval is a significant step in the government’s plan to reshape India’s insurance system.
100% FDI proposal at the core of Insurance Laws Bill
The main change proposed in the Bill is increasing the foreign direct investment (FDI) limit in insurance companies to 100%, up from the current limit of 74%. This aims to attract long-term global capital, improve competition, and enhance customer services.
India’s insurance penetration is low compared to global levels. Life insurance penetration is around 3%, while general insurance sits at about 1%. The government believes that allowing higher foreign ownership will help insurers widen coverage, launch new products, and raise service standards.
Part of broader financial sector reforms
Finance Minister Nirmala Sitharaman announced the proposal to increase the FDI cap in the Union Budget as part of a set of new financial sector reforms. To date, the insurance sector has drawn nearly Rs 82,000 crore in FDI. Officials expect the updated limit to lead to much higher investments.
The Bill aims to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999, focusing on modernization, simplifying business procedures, and enhancing policyholder protection.
Read also: