Parliament Passes Sabka Bima Sabki Raksha Bill 2025, Paving Way For 100% FDI In Insurance

New Delhi, Dec 19 (KNN) Parliament has passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which amends key legislation governing India’s insurance sector, including the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

One of the provisions of the bill allows up to 100 per cent Foreign Direct Investment (FDI) in insurance companies, opening the sector to greater foreign participation. 

The move is expected to support capital augmentation, adoption of advanced technologies, implementation of global best practices, and expansion of employment opportunities. 

Increased competition is projected to enhance efficiency in insurance products and services, ultimately benefiting policyholders.

The bill introduces measures aimed at simplifying operations for insurers and intermediaries. It provides for one-time licensing of intermediaries and allows licenses to be suspended rather than cancelled outright. 

For insurers, the threshold for obtaining prior regulatory approval for share capital transfers has been raised from 1 per cent to 5 per cent, and the Net Owned Fund (NOF) requirement for Foreign Reinsurance Branches has been reduced from Rs 5,000 crore to Rs 1,000 crore. 

Additionally, LIC has been granted the autonomy to open zonal offices within India and to align its foreign offices with local laws and regulations.

To safeguard policyholders, a dedicated Policyholders’ Education and Protection Fund will be established to raise awareness about insurance products. Collection and protection of policyholder data will be aligned with the Digital Personal Data Protection (DPDP) Act, 2023.

The bill strengthens regulatory oversight by establishing standard operating procedures for rule-making and requiring a consultative process, empowering IRDAI to recover wrongful gains from insurers and intermediaries, and rationalising penalties with clearly defined factors for their imposition.

(KNN Bureau)