India's Parliament has passed the Sabko Bima Sabko Raksha Bill, 2025, in both houses, amending key insurance laws to permit 100 per cent foreign direct investment. The legislation seeks to expand insurance coverage to achieve 'Insurance for All by 2047'. Opposition parties have voiced concerns over privatization's impact on domestic interests.
India's Parliament has taken a significant step to liberalize the insurance sector by passing the Sabko Bima Sabko Raksha (Amendment of Insurance Laws) Bill, 2025. The Lok Sabha approved the bill on Tuesday, with the Rajya Sabha following suit shortly after. The legislation amends the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority of India Act of 1999.
The primary provision raises the foreign direct investment cap from 74 per cent to 100 per cent, anticipated to draw more foreign capital and facilitate technology transfer. It also lowers the net owned funds requirement for foreign reinsurers from Rs 5,000 crore to Rs 1,000 crore, which could attract additional players to the market.
In the past decade, the number of insurers has risen from 54 to 74, insurance density from $55 to $97 per person, and penetration from 3.3 per cent to 3.7 per cent of GDP. Yet, India's insurance density stands at just 0.6 per cent of the global average, underscoring the need for greater expansion.
The bill enhances the Insurance Regulatory and Development Authority of India's (IRDAI) powers, granting it authority to disgorge wrongful gains, akin to the Securities and Exchange Board of India. Opposition parties have highlighted concerns regarding the effects of privatization on domestic stakeholders.
This reform supports the vision of 'Insurance for All by 2047', targeting the country's deeply underserved insurance market.
