Key Takeaways
- FDI limit in insurance to be raised from 74% to 100%
- Insurance Laws (Amendment) Bill 2025 listed for Winter Session
- Reforms aim for ‘Insurance for All by 2047’ and ease of doing business
- LIC Act amendments to empower board on operational decisions
The government will introduce legislation to increase foreign direct investment in insurance to 100% during the Winter Session of Parliament starting December 1. This major reform aims to boost sector growth and penetration.
Finance Minister Nirmala Sitharaman first proposed hiking the FDI cap from 74% to 100% in her Budget speech as part of next-generation financial reforms. The insurance sector has already attracted ₹82,000 crore through foreign investment.
Comprehensive Legislative Changes
The Insurance Laws (Amendment) Bill 2025 is among 10 legislations listed for the 15-working-day session ending December 19. The bill seeks to deepen insurance penetration, accelerate sector growth, and enhance ease of doing business.
The Finance Ministry has proposed amending the Insurance Act, 1938 to:
- Increase FDI limit to 100%
- Reduce paid-up capital requirements
- Introduce composite licensing
In a comprehensive exercise, the Life Insurance Corporation Act 1956 and IRDA Act 1999 will also be amended alongside the Insurance Act.
LIC Board Empowerment and Policyholder Benefits
The LIC Act amendments will empower its board to take operational decisions on branch expansion and recruitment. The changes focus on promoting policyholder interests, enhancing financial security, and facilitating new market entrants.
These reforms are expected to drive economic growth, generate employment, and improve industry efficiency. The goal is to achieve ‘Insurance for All by 2047’ through enhanced penetration.
Additional Financial Legislation
The Finance Ministry will also introduce the Securities Markets Code Bill, 2025 to consolidate SEBI Act, Depositories Act, and SCRA into a single code.
Additionally, the first batch of Supplementary Demands for Grants 2025-26 will be presented, seeking Parliament approval for additional expenditure. The final batch will follow in the Budget session likely beginning late January.
