Lok Sabha passes Bill on 100% FDI in insurance

The Lok Sabha on Tuesday (December 16, 2025) passed an all-important Bill that proposes to raise foreign direct investment (FDI) in the insurance sector from 74% to 100% besides a clutch of other amendments to insurance laws amid protests from the opposition.

Finance Minister Nirmala Sitharaman, in her reply to the discussion, said allowing 100% FDI would pave the way for further capital infusion, better technology, as well as better insurance products. It would ease the process for global companies to foray into the Indian insurance market without domestic partners, she said, adding that forming a joint venture is a mammoth task.

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All Indian laws will apply to the companies. They will be regulated like other insurance entities, she said, seeking to allay apprehensions around changes the Bill is proposing to the Insurance Act, 1938; the Life Insurance Corporation Act, 1956; and the Insurance Regulatory and Development Authority Act, 1999.

The FDI limit for insurance companies was raised from 26% to 49% in 2015 and from 49% to 74% in 2021.

On the amendment reducing the net owned fund requirement for foreign reinsurance branches from ₹5,000 crore to ₹1,000 crore, she said the move would invite more reinsurers to the country for creating greater risk capacities and create level playing field for FRBs in domestic tariff area as opposed to IFSC.

Stating that the government’s priority is to strengthen the public sector insurance companies, she said ₹17,450 crore was infused in 3 public sector general insurance companies to strengthen their capital base. Listing of LIC, GIC Re and New India Assurance was also a step in the direction of boosting public insurers.

The number of insurers in the country has increased from 53 in 2014–15 to 74 in 2024–25. Total insurance premium mobilised during the same period went up from ₹4.15 lakh crore to ₹11.93 lakh crore. Assets under management increased from ₹24.20 lakh crore to ₹74.43 lakh crore, she said.

The Finance Minister also sought to highlight the enhanced autonomy the Bill will provide to LIC to open zonal offices and align compliance for its foreign offices with the laws and regulations of their respective jurisdiction. The Bill also empowers the insurance regulator IRDAI to disgorge wrongful gains from insurers and intermediaries.

As part of a proposal to rationalise penalties to be imposed by IRDAI, the maximum limit of penalty on insurance intermediaries, like in the case of insurers, is to be increased from ₹1 crore to ₹10 crore to “act as a deterrent and encourage legal and regulatory compliance.”

Terming the Bill as a landmark reform, General Insurance Council Chairman and Bajaj General Insurance MD and CEO Tapan Singhel said that by strengthening policyholder protection, improving transparency and empowering the regulator, the Bill builds trust at the core of the insurance system.

Opening the sector to global participation brings in long-term investment and global expertise that can drive innovation and improve customer experience. Even limited global participation can translate into significant investment for India. This will help expand insurance coverage, create jobs across the value chain, and make insurance more accessible and affordable.