The government is expected to table the Insurance Laws (Amendment) Bill 2025 in the Winter Session of Parliament from 1-19 December. If passed, it will mark one of the most extensive updates to India’s insurance framework in over a decade.
The Bill proposes amendments to the Insurance Act, the LIC Act, and the IRDAI Act, with the broader objective of expanding capital access, simplifying licensing, strengthening governance and supporting the long-term goal of Insurance for All by 2047.
Below is an overview of the key proposals and their implications.
1. Opening the Door to 100% FDI
One of the headline changes is the proposal to allow 100% foreign direct investment in insurance companies.
Industry bodies say higher FDI limits could:
- bring in long-term global capital
- improve underwriting and pricing sophistication
- accelerate digital and product innovation
- increase competition and efficiency
According to Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI), full foreign ownership may strengthen India’s insurance ecosystem through deeper capital pools and global expertise.
2. Composite Licences for Life, General and Health
The Bill proposes a composite licence framework that allows insurers to operate across life, general and health segments under a single licence.
This is a significant shift from the current model, where separate licences are mandatory.
Benefits include:
- operational efficiency
- reduced compliance friction
- streamlined product offerings
- improved customer experience, especially for SMEs and households that buy from multiple insurers today
3. Lower Capital Requirements for New Entrants
Revised capital norms are expected to make market entry easier for:
- specialised insurers
- digital-first or insurtech players
- micro-insurance providers
Lower thresholds could broaden participation in a market where penetration remains low relative to population size and risk exposure.
4. More Autonomy for LIC’s Board
Amendments to the LIC Act aim to give LIC’s Board greater operational independence.
Analysts believe additional autonomy will:
- strengthen governance
- enhance responsiveness
- support LIC’s continued role as a systemically important insurer
Bharindwal notes that this is a “positive step” that can reinforce accountability without weakening LIC’s strategic position in the sector.
5. Brokers Push for Perpetual Licences
The broking community is advocating for perpetual licences, subject to ongoing compliance and fit-and-proper norms.
According to IBAI, such a system would:
- align India with global regulatory practice
- reduce administrative burden for insurers and the regulator
- encourage long-term investments in compliance, talent and technology
Brokers argue that easing licensing constraints is essential for expanding insurance reach over the next two decades.
A Reform Cycle That Could Define the Sector’s Next Phase
If enacted, the Insurance Amendment Bill 2025 could reshape how insurance companies operate, raise capital and expand coverage. For customers, it may mean broader product choice, greater competition and improved service standards.
For an industry still under-penetrated relative to India’s needs, the Bill represents a potentially transformative shift. Stakeholders will be watching the Winter Session closely, as the decisions taken now could shape the sector’s trajectory until 2047 and beyond.