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NEW DELHI. Parliament has officially passed a transformative piece of legislation to revolutionize the domestic financial services market. The Rajya Sabha cleared the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 via a voice vote on Wednesday. This follows the bill’s successful passage in the Lok Sabha a day earlier. The new law raises the limit for Foreign Direct Investment (FDI) in the insurance sector to 100 per cent from the existing 74 per cent.
Boosting Capital Infusion and Competition
Replying to the debate, Finance Minister Nirmala Sitharaman emphasised that the amendments will allow foreign companies to bring significantly more capital into the country. She noted that many foreign insurers previously struggled to find suitable domestic joint venture partners. By allowing 100% ownership, the government removes this hurdle, paving the way for more international players to enter the Indian market.
Furthermore, the Minister expressed confidence that increased competition will directly benefit the common man. As more companies compete for market share, insurance premiums are expected to drop, making coverage more affordable for millions. “Since assuming office in 2014, our government has introduced significant reforms in the insurance sector,” Sitharaman stated, highlighting that true national development requires broader coverage for people and businesses.
Employment Growth and Safeguards
Addressing concerns about the job market, the Finance Minister provided robust data to show a positive trend. She informed the House that the number of employees and agents in the sector has nearly tripled, growing from 30.14 lakh in 2014-15 to 88.17 lakh in 2024-25. These amendments are expected to further strengthen formal employment and skill development across the nation.
Additionally, the Minister allayed fears regarding the repatriation of profits by foreign firms. She clarified that the regulator, IRDAI, mandates a minimum solvency ratio of 1.5. This ensures that companies maintain assets 1.5 times their liabilities. Profits are only calculated after providing for all reported and potential liabilities, ensuring the interests of policyholders remain protected.
Empowering LIC and Public Schemes
The Bill also introduces structural changes, including the potential merger of non-insurance entities with insurance firms. Importantly, Sitharaman dismissed allegations that these reforms would dilute the status of the Life Insurance Corporation (LIC). She noted that LIC’s Assets Under Management (AUM) grew by 6.45 per cent to ₹54.52 lakh crore in the last fiscal year. “We are actually empowering LIC,” she asserted.
The legislation also establishes the Policyholders’ Education and Protection Fund. This fund will further enhance regulatory oversight and transparency. With private insurers already contributing heavily to schemes like PM Fasal Bima Yojana and Jan Suraksha, this 100% FDI limit marks a final step toward achieving “Insurance for All.”
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