Finance Minister introduces ‘Insurance for All, Protection for All’ Bill in Lok Sabha; 100% FDI to be approved

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday introduced the much-awaited ‘Insurance for All, Protection for All Bill, 2025’ in the Lok Sabha. While introducing the bill, the Finance Minister cited the need to increase foreign investment in the insurance sector and enhance the efficiency of domestic companies. The bill proposes comprehensive amendments to three major laws: the Insurance Act (1938), the Life Insurance Corporation Act (1956), and the Insurance Regulatory and Development Authority Act (1999).

Introducing the bill, Union Finance Minister Nirmala Sitharaman said, “Insurance for the common man has always been a priority for Prime Minister Narendra Modi, and the central government has provided insurance to the marginalized sections of society even during the COVID-19 pandemic.” According to the government’s bill, the limit for Foreign Direct Investment (FDI) in insurance companies is proposed to be increased from 74% to 100%. This move is expected to increase the flow of foreign capital and technology into the Indian insurance market.
What are the five major points of the bill? Find out below:

Until now, the limit for foreign investment in Indian insurance companies was 74%. After the passage of this bill, foreign companies will be able to operate in India with 100% ownership. Experts believe that this will not only increase the flow of foreign currency but will also allow global insurance companies to bring their modern technology and new products to Indian customers. The bill proposes amendments to the LIC Act, 1956, to give more powers to the board of the government-owned insurance company. Now, LIC will not require prior government permission to open new zonal offices. This will enable the government insurance company to compete more effectively with private companies in the market.

After the new bill becomes law, a ‘one-time registration’ system will be implemented for insurance agents and intermediaries. This means they will be freed from the hassle of repeatedly renewing their licenses, which is a major step towards ‘ease of doing business’. The main objective of the bill is to protect the interests of policyholders. It includes provisions for hefty penalties on insurance companies for violating regulations. It also proposes strengthening the insurance regulator, IRDAI, to make claim settlements faster and more transparent. The bill proposes reducing the mandatory ‘net owned funds’ requirement for foreign reinsurance companies from ₹5,000 crore to ₹1,000 crore. This is expected to expand the reinsurance market in India and improve risk management.

The government states that insurance penetration in India is still lower than the global average. Significant investment is needed to provide insurance coverage to every Indian by 2047, which will be possible with 100% FDI. However, some opposition MPs and employee unions have expressed concerns about reduced government control over LIC and the potential for foreign companies to gain a monopoly. The bill also includes provisions to ensure that even with 100% FDI, the appointment of an Indian citizen to key positions (such as CEO or MD) in the company may be made mandatory to protect domestic interests.

Following the news of 100% FDI in the insurance sector, the shares of listed insurance companies (such as LIC, SBI Life, and HDFC Life) may see increased activity in the stock market. According to analysts, this reform could completely transform the Indian insurance sector over the next decade.