Parliament passes Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025

Why in News

• Parliament passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 on 18 December 2025.
• The Bill raises FDI in the insurance sector from 74% to 100%, aiming to boost capital inflows, competition, and insurance penetration.

Key Amendments

The Bill amends:

1. Insurance Act, 1938
2. Life Insurance Corporation Act, 1956
3. Insurance Regulatory and Development Authority Act (IRDAI Act), 1999

Major Provisions

100% FDI in Insurance

• Allows full foreign ownership of insurance companies.
• Enables global insurers to infuse capital without dependence on Indian JV partners.
• Current scenario:
  • Total insurers in India: 70
  • With foreign investment: 40
    • <26% FDI: 10 insurers
    • 26–49%: 23 insurers
    • 49–74%: 3 insurers
    • 74%: 4 insurers

Stronger Policyholder Protection

• Penalties increased from ₹1 crore to ₹10 crore for insurers and intermediaries.
• Penalty proceeds to be credited to a new Policyholders’ Education and Protection Fund.
• Objective:
  • Improve insurance awareness
  • Strengthen consumer protection

Reforms for Insurance Intermediaries

• One-time registration for intermediaries → uninterrupted services.
• Licences:
  • Not cancelled for violations
  • Only suspended, allowing time for corrective compliance.

Reinsurance Reforms

• Net owned fund requirement for foreign reinsurers reduced:
  • From ₹5,000 crore to ₹1,000 crore
• Expected to attract global reinsurance players and reduce risk concentration.

Greater Autonomy to LIC

• LIC empowered to:
  • Open zonal offices independently
  • Align compliance of its foreign offices with host country laws, rather than Indian regulations alone.

Significance

• Encourages foreign capital inflow in a capital-intensive sector.
• Improves insurance penetration and density.
• Enhances regulatory flexibility while strengthening consumer safeguards.
• Supports the broader vision of “Insurance for All” (Sabka Bima).