The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was introduced in the Lok Sabha on December 16, 2025. The Bill aims to modernise India’s insurance laws by amending three key legislations — the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
Its main objective is to strengthen regulation, attract global investment, improve ease of doing business, and enhance policyholder protection.
100% Foreign Direct Investment Allowed in Indian Insurance Companies
One of the most significant proposals in the Bill is the increase in the Foreign Direct Investment (FDI) limit in Indian insurance companies. The Bill allows foreign investors to hold up to 100% of the paid-up equity capital, compared to the earlier cap of 74%. This move is expected to bring in more global capital, advanced technology, and international expertise into India’s insurance sector.
Lower Capital Requirements for Foreign Re-insurance Firms
The Bill also eases entry norms for foreign re-insurance companies. It reduces the net-owned fund requirement from Rs 5,000 crore to Rs 1,000 crore.
Net-owned funds include paid-up equity capital, free reserves, share premium balance, and capital reserves created from surplus sale proceeds. The relaxation is aimed at encouraging more re-insurers to operate in India.
Share Transfer Rules Relaxed for Insurance Companies
Under the existing Insurance Act, insurance companies require IRDAI approval for registering share transfers if the transaction exceeds 1% of paid-up share capital.
The new Bill proposes to raise this threshold to 5%, reducing regulatory approvals for smaller transactions and making ownership changes smoother and faster.
No Minimum Capital Mandate for Insurance Co-operative Societies
The Bill amends the definition of insurance co-operative societies by removing the requirement of maintaining a minimum paid-up share capital of Rs 100 crore. This change applies to life, general, and health insurance co-operatives, making it easier for such societies to enter and operate in the insurance business.
Insurance Law Applicability Extended to SEZs and IFSCs
Currently, the central government can relax or modify insurance law provisions for insurers operating in Special Economic Zones (SEZs). The Bill extends these powers to International Financial Services Centres (IFSCs) set up within SEZs. It also allows similar flexibility for insurance intermediaries operating in SEZs and IFSCs, supporting India’s goal of becoming a global financial hub.
Expanded Definition of Insurance Intermediaries
The Bill broadens the scope of insurance intermediaries. In addition to brokers, insurance consultants, and third-party administrators, the definition will now include managing general agents and insurance repositories, reflecting the evolving structure of the insurance ecosystem.
IRDAI Gets Wider Regulatory and Enforcement Powers
The proposed law significantly strengthens the authority of IRDAI. It allows the regulator to approve schemes of arrangement between insurers and non-insurance companies.
IRDAI will also have the power to supersede the Board of Directors of an insurer and appoint an administrator if the company is acting against policyholder interests.
Further, IRDAI can regulate remuneration, commissions, rewards, payment structures, and disclosures for insurance agents and intermediaries. Its inspection and investigation powers will now extend to intermediaries as well.
New Policyholders’ Education and Protection Fund Proposed
To enhance consumer awareness and protection, the Bill proposes the creation of a Policyholders’ Education and Protection Fund, to be managed by IRDAI. The Fund will be financed through government grants, donations from institutions, penalties collected by IRDAI, and other prescribed sources. Its purpose is to educate policyholders and safeguard their interests across the insurance sector.
Also Read: Securities Markets Code Bill 2025 Tabled in Lok Sabha: What It Means for SEBI & Investors
