Insurance Bill 2025: A historic change is underway in India’s insurance sector. The central government has approved the Insurance Act Amendment Bill 2025, titled “Insurance for All, Security for All.” This bill will bring about comprehensive reforms to insurance laws that are almost 100 years old. Finance Minister Nirmala Sitharaman will introduce it in Parliament. The government says this change aims to increase insurance coverage and make policyholders more secure.
100% FDI in the insurance sector cleared
The biggest change in this bill is related to the limit on Foreign Direct Investment (FDI). Until now, only 74% FDI was allowed in insurance companies, but under the new law, this has been increased to 100%. This will allow foreign insurance companies to operate in India with full ownership. This will increase the entry of international companies into the Indian insurance market and intensify competition.
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Insurance will be cheaper and better for common customers
The increased competition in the insurance market will directly benefit ordinary people. Companies will try to offer more coverage at lower premiums. This means that better insurance plans will now be within the reach of the common man, and insurance will no longer be an expensive proposition.
New-age insurance plans will be available
Foreign companies will also bring modern and global-standard insurance plans with them. Plans like cyber insurance, pet insurance, and customized micro-insurance will become readily available. This will provide people with better protection against the risks of changing times.
Claim settlement will be faster and more transparent
The new system also focuses on the quality of service. Foreign companies will bring new technology and global experience, which will make the claims process faster and simpler. Policyholders will be able to receive financial assistance quickly when needed.
IRDAI will get more powers
Under the new law, the insurance regulator IRDAI will be given more powers. It will be able to recover illegally earned profits from companies that violate the rules. This will better protect the interests of customers and curb mis-selling. Insurance will reach rural areas and small towns
With the removal of FDI limits, insurance companies will rapidly expand their reach to villages and small towns. This will provide insurance coverage to those who were previously outside its scope.
LIC will get more operational freedom
India’s largest insurance company, LIC, will also benefit from the new law. It will no longer have to wait for government approval for opening new zonal offices and making business decisions. This will improve LIC’s services.
The insurance sector will be strengthened, and employment will increase
Foreign investment will strengthen the financial position of insurance companies. It will also create new employment opportunities in the insurance and related sectors. A strong insurance sector will also support the country’s economy.