Insurance Amendment Bill 2025 : The Lok Sabha on Tuesday ( December 16 ) approved a bill providing for increasing foreign direct investment ( FDI) in the insurance sector to 100 percent . After discussion on the bill and the reply of Finance Minister Nirmala Sitharaman, the House rejected the amendments of the opposition members and passed the ‘ Sabka Bima Sabki Raksha ( Amendment of Insurance Laws ) Bill, 2025 ‘ by voice vote . The new amendment will increase the limit of foreign direct investment in the insurance sector from 74 percent to 100 percent .
Earlier, responding to the discussion on the bill, Finance Minister Nirmala Sitharaman said that the Insurance Bill has been amended 12 times so far . She added that amendments come in many forms, reflecting the country’s progress and the needs of the insurance sector. She added that this bill includes measures to protect the common people and farmers.
Sitharaman stated that robust protection measures have been put in place for public sector insurance companies. She added that more than Rs 17,000 crore has been spent to improve the health of three public sector insurance companies . These measures have significantly improved their health.
Will the premium amount go to foreign companies ?
Sitharaman dismissed allegations by some opposition members that premiums would go to foreign companies. She said opening up the insurance sector would ensure better technology and better products . The Finance Minister noted that 120 million families have benefited from the Ayushman Bharat scheme . She added that the bill would also help insurance agents .
The Finance Minister said that the bill, if enacted into law, would benefit the Life Insurance Corporation of India ( LIC ), which would gain greater autonomy . He said the draft bill had been shared with the states and union territories .
Policyholders will benefit
Nirmala Sitharaman said the GST Council Secretariat is examining complaints about Goods and Services Tax ( GST) reductions not reaching policyholders . According to her, the Insurance Bill proposes reducing the net owned fund requirement for reinsurance companies from Rs 5,000 crore to Rs 1,000 crore.
The Finance Minister said that the Insurance Regulatory and Development Authority of India (IRDAI) is being empowered to recover illegal profits earned by insurance companies and distribute them to affected insurance policyholders . The Bill seeks to amend the Insurance Act , 1938, the Life Insurance Corporation Act , 1956, and the Insurance Regulatory and Development Authority Act , 1999.
Key points of the bill
The bill states that with these changes, the limit of foreign direct investment ( FDI) in the insurance sector will be increased from 74 per cent to 100 per cent .
According to the bill , despite increasing FDI in the insurance sector to 100 per cent , one of the top officials, be it chairman, managing director or CEO, must be an Indian citizen.
The bill also paves the way for the merger of a non-insurance company with an insurance company . The Union Cabinet approved the bill last Friday.
According to the objects and reasons of the Bill, it aims to accelerate the growth and development of the insurance sector and ensure better protection of policyholders.
The Bill provides for the establishment of a Policyholders Education and Protection Fund to protect the interests of policyholders .
The bill states that it will facilitate ease of doing business for insurance companies, intermediaries, and other stakeholders , and will also bring transparency in regulation and enhance regulatory oversight of the insurance sector .
The Bill provides for a term of five years or until they attain the age of 65 years for the Chairman and other full -time members of the company.
Currently, the upper age limit for full -time members is 62 years , while for the chairman it is 65 years.