Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025
The Union Cabinet approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, on December 12, 2025. The Bill seeks to modernize India's insurance framework and proposes changes to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999. It is intended to expand coverage, enhance regulatory oversight, and modernize the sector.
Key Features of the Insurance Bill
- 100% Foreign Direct Investment (FDI)
- The FDI limit in Indian insurance companies is raised from 74% to 100%.
- This aims to attract stable investments, facilitate technology transfer, and enhance insurance penetration with a goal of 'Insurance for All by 2047'.
- The sector is expected to benefit from increased capital, product innovation, and intensified competition.
- Sops for Foreign Reinsurers
- The Net Owned Funds requirement for foreign reinsurers is reduced from Rs 5,000 crore to Rs 1,000 crore, encouraging more re-insurers to enter the market.
- More Powers for IRDAI
- The Insurance Regulatory and Development Authority of India (IRDAI) will have enhanced enforcement powers, similar to SEBI, to recover wrongful gains.
- A one-time registration system for insurance intermediaries is proposed to streamline operations.
- IRDAI's approval threshold for equity capital transfer in insurance companies is raised from 1% to 5%.
- More Powers for LIC
- Life Insurance Corporation of India (LIC) will have greater operational freedom, including setting up new zonal offices without prior government approval.
Omissions in the Bill
- Composite Licences
- The Bill does not include provisions for composite licences, which would allow insurers to offer both life and non-life products.
- This could have led to integrated offerings and increased competition and innovation in the sector.
- Minimum Capital Requirements
- No provisions to lower the minimum capital requirements for new insurers are included, which could have benefited regional or niche players.
- Other Financial Products and Captive Insurance
- The original Bill included provisions for distributing financial products like mutual funds and allowing large corporations to establish captive insurance entities, but these are absent in the current draft.
