Industry Odisha Bureau, May 3: While “Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025” was passed in December 2025 as a major reforms in India’s insurance sector, with the seal of approval accorded by the President of India, the Ministry of Finance yesterday (May 3) formally announced cent (100) per cent foreign direct investment (FDI) into the country’s insurance sector with a 20 per cent cap for Life Insurance Corporation of India (LIC).
Thus, “full foreign ownership” will now reportedly be “allowed in the insurance firms and intermediaries and brokers via automatic route”, while the earlier limit was reportedly 74 per cent.
Nevertheless, the Government of India (GoI) has reportedly put a cap of 20 per cent for India’s prime insurance firm- Life Insurance Corporation of India (LIC).
In February 2026, he Department for Promotion of Industry and Internal Trade (DPIIT) under the Commerce and Industry Ministry had officially notified 100% FDI in the insurance sector.
Notably, the “Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025” reportedly amends the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999, and the Life Insurance Corporation Act, 1956.
Highlights of “Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025”:
1) 100% FDI & Foreign Reinsurers: Allows 100% FDI in insurance companies. The minimum net owned fund for foreign reinsurance branches is reduced to ₹1,000 crore.
2) Ease of Doing Business: Removes the mandatory ₹100 crore paid-up capital requirement for insurance cooperatives. Introduces perpetual registration for intermediaries (ending 3-year renewals).
3) Regulatory & Structural Changes:
• Share Transfers: Raises the threshold for mandatory IRDAI approval for share transfers from 1% to 5%.
• Composite Licensing: Permits insurers to obtain a single license for multiple classes of insurance (life, general, health).
• Mergers: Enables mergers between insurers and non-insurance companies, subject to IRDAI approval.
• Governance: Empowers IRDAI to directly regulate agent remuneration and investigate intermediaries.
• Policyholder Protection & Senior Citizens:Protection Fund: Establishes a Policyholders’ Education and Protection Fund.
• Senior Citizen Focus: Mandates age-sensitive health plans for seniors with limited premium hikes (max 5% per year without approval) and enables easier portability.
• Data Governance: Imposes strict confidentiality rules on policyholder data, with new regulations on KYC data processing and security.
