‘Sabka Bima Sabki Raksha’ Bill Passed, Set to Transform Insurance Sector and Attract Foreign Investment

New Delhi, Dec 18: The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 received Parliament’s approval on Wednesday after clearing both Houses, marking a major step toward modernising India’s insurance sector. The legislation, moved by Union Finance Minister Nirmala Sitharaman, aims to expand coverage, strengthen regulatory oversight, and promote sectoral growth.

A landmark provision raises the Foreign Direct Investment (FDI) limit in Indian insurance companies from 74% to 100%, a strategic reform expected to attract foreign capital, enhance competition, and accelerate technology adoption, supporting the government’s vision of ‘Insurance for All by 2047.’

The Bill also reduces the Net Owned Funds (NOF) requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, encouraging broader participation and boosting reinsurance capacity and competition.

To strengthen regulatory enforcement, the Insurance Regulatory and Development Authority of India (IRDAI) is granted disgorgement powers to recover wrongful gains. The legislation also introduces a one-time registration for insurance intermediaries, raises the threshold for IRDAI approval of equity transfers from 1% to 5%, and mandates formal SOPs for transparent rule-making.

For Life Insurance Corporation (LIC), the Bill provides greater operational autonomy, allowing the opening of new zonal offices without prior government approval and restructuring overseas operations per host country laws, modernising governance and boosting competitiveness.

While some industry demands, such as a composite license, were partially excluded, the Bill is expected to balance industry growth, consumer protection, and financial sector reforms. Sitharaman emphasised that the legislation will enhance policyholder protection, improve ease of doing business for insurers, and strengthen transparency and oversight.