India Opens Doors to 100% FDI in Insurance, Aims for Greater Penetration
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New Delhi: In a move to boost the insurance sector, the Lok Sabha passed a bill on Tuesday that allows 100% foreign direct investment (FDI) in insurance, removing the existing cap of 74%. Union Finance Minister Nirmala Sitharaman said the move will enable global insurance companies to directly invest in the country without needing local partners, bringing in substantial capital and world-class risk assessment techniques. The bill, Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, aims to increase insurance penetration and make insurance more accessible to the public. Sitharaman highlighted several key features of the bill, including the creation of a policyholders' education and protection fund to spread insurance awareness, better regulatory oversight, and the introduction of a one-time registration for insurance intermediaries. The bill also empowers the Insurance Regulatory and Development Authority of India (IRDAI) to ensure fair play and has provisions for merger of non-insurance companies with insurance firms, suspension of intermediary licenses, and disgorging of wrongful gains. The government has also been granted powers to notify other classes of insurance business and activities without amending the Insurance Act. Experts say the bill has given the regulator more powers to form regulations for policyholder protection, including on key matters such as commission payments and penalties. The opposition, however, has raised concerns about the bill, saying it allows complete foreign ownership and pricing decisions made outside India. The bill is expected to bring in more foreign insurers and increase insurance density, which has risen from $55 in 2014-15 to $97. The total amount of insurance premium has also increased from ₹4.15 lakh crore in 2014-15 to ₹11.93 lakh crore. The government aims to further strengthen regulatory oversight and ease compliance, making insurance more accessible to the public.
