The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, passed by Parliament of India, introduces wide-ranging reforms to deepen insurance penetration, improve ease of doing business, and strengthen regulatory governance. A key change is permitting up to 100% foreign direct investment in insurance companies to enable capital infusion, adoption of advanced technology, global best practices, and increased competition, ultimately improving products and services for policyholders. The Bill amends the Insurance Act, 1938, LIC Act, 1956, and IRDAI Act, 1999, easing compliance through one-time licensing for intermediaries and replacing automatic licence cancellation with suspension. It raises the threshold for prior approval of share transfers, reduces the net owned fund requirement for foreign reinsurance branches, and grants LIC greater operational autonomy. To protect consumers, a Policyholders’ Education and Protection Fund is created, data protection is aligned with the DPDP Act, 2023, and regulatory powers of Insurance Regulatory and Development Authority of India are strengthened, including penalty rationalisation and disgorgement of wrongful gains.
Ministry of Finance
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 passed by Parliament; allows up to 100% FDI in insurance companies
The Bill to deepen insurance coverage, provide ease of doing business and improve regulatory oversight and governance
Capital augmentation, adoption of advanced technology and global best practices in insurance sector to be leveraged
Increased competition to drive efficiency in products and services for citizens
Net Owned Fund requirement of Foreign Reinsurance Branches reduced from 5,000 Cr to 1,000 Cr
Policyholders’ Education and Protection Fund, a dedicated fund to spread awareness about insurance amongst policyholders
Posted On: 18 DEC 2025
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 has been passed by Parliament on 17.12.2025. The bill amends three Acts related to Insurance sector, namely, The Insurance Act,1938, The Life Insurance Corporation Act, 1956 and The Insurance Regulatory and Development Authority Act, 1999.
One of the key features of the bill is to allow up to 100% Foreign Direct Investment in Insurance Companies, opening doors to more foreign players to India. This will help in capital augmentation, adoption of advanced technology and bringing global best practices along with increasing employment opportunities. Increased competition would drive efficiency in products and services proving beneficial for the citizens.
Ease of Doing business is being promoted for intermediaries through the introduction of provision of one-time licensing and the provision of suspension of license rather than straight away cancellation. For insurers, the limit of seeking prior regulatory approval for transfer of share capital has been raised from 1% to 5%, the Net Owned Fund requirement of Foreign Reinsurance Branches has been reduced from Rs 5,000 Crore to Rs 1,000 Crore. LIC has been provided autonomy to open Zonal offices in the country and to align its foreign offices with the laws and regulations of their respective jurisdiction.
To protect the interest of Policyholders, a dedicated fund, namely Policyholders’ Education and Protection Fund will be set up to spread awareness about insurance. Policyholders’ data would now be required to be collected and protected in alignment with DPDP Act 2023.
Regulatory governance is being strengthened by introducing standard operating procedure for regulation making and mandating the process consultative. IRDAI is being given the power to disgorge wrongful gains from insurers and intermediaries. Penalties are being rationalised and factors for imposition of penalties are being introduced.
The reforms are aimed at extending insurance coverage to people, households and enterprises, deepening insurance coverage, providing ease of doing business, improving regulatory oversight and governance. All these measures would lead to strengthening of Indian insurance sector to provide financial resilience to Indian economy.
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Extract of the bill
AS INTRODUCED IN LOK SABHA
Bill No. 195 of 2025
THE SABKA BIMA SABKI RAKSHA (AMENDMENT OF INSURANCE LAWS) BILL, 2025
STATEMENT OF OBJECTS AND REASONS
The Insurance Act, 1938 (“Insurance Act”) was enacted to consolidate and amend the laws relating to the business of insurance in the country. Later, the insurance business was opened for private sector and foreign direct investment up to 26 per cent. was permitted. At the same time, the Insurance Regulatory and Development Authority Act, 1999 (“IRDA Act”) was enacted to protect the interests of the policyholders and to regulate, promote and ensure orderly growth of the insurance industry. These two Acts, along with the two other Acts, namely, the Life Insurance Corporation Act, 1956 (“LIC Act”) and the General Insurance Business (Nationalisation) Act, 1972 (“GIBNA Act”), form the legislative framework of the insurance sector in the country.
2. Over the last two decades, the insurance sector has considerably expanded, providing insurance coverage to individuals, property and enterprises. However, in order to accelerate the growth and development of the insurance sector for enabling it to cater to the growing needs of the economy, it is essential to introduce a series of forward-looking reforms in the above-mentioned insurance laws. There is also need to create better awareness about insurance among citizens, to enhance policyholders’ protection and to bring about transparency in governance and operations of the insurance companies and the regulator, so as to enhance the trust of the policyholders in the insurance ecosystem.
3. Therefore, it is proposed to introduce the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 in Parliament to amend various provisions contained in the Insurance Act, the LIC Act and the IRDA Act to achieve, inter alia, the following objectives, namely:—
a. to further accelerate the growth and development of the insurance sector;
b. to ensure better protection of policyholders;
c. to improve ease of doing business for insurance companies, intermediaries and other stakeholders;
d. to bring transparency in regulation making and to improve regulatory oversight over the sector;
4. The Notes on Clauses explain in detail the various provisions contained in the Bill.
5. The Bill seeks to achieve the above objectives.
NIRMALA SITHARAMAN.
NEW DELHI;
The 12th December, 2025.
Notes on clauses
Clause 1.—This clause provides for the “short title and commencement” of the proposed Legislation.
Clause 2.—This clause seeks to substitute certain expressions by certain other expressions.
Clause 3.—This clause seeks to amend section 2 of the principal Act to substitute, insert and omit certain viz. “class of insurance business”, “health insurance business”, “insurance business”, “insurer” and “insurance intermediary” etc.
Clause 4.—This clause seeks to amend section 2C of the principal Act of definition to include statutory bodies, foreign reinsurance branches for recognising their eligibility and further seeks to expressly bring cross-border re-insurers within the scope of the said Act.
Clause 5.—This clause seeks to amend section 2CA of the principal Act to include insurance intermediaries in International Financial Services Centres established in Special Economic Zones so as to allow Central Government to apply provisions of the said Act to such centres.
Clause 6.—This clause seeks to amend section 3 of the principal Act to empower the Authority to grant registration to an insurer.
Clause 7.—This clause seeks to insert new section 3AA in the principal Act to enable foreign direct investments up to 100% in Indian insurance companies.
Clause 8.—This clause seeks to amend section 6 of the principal Act to reduce the net-owned fund requirements for foreign re-insurers, to encourage more foreign re-insurers to open branches in India.
Clause 9.—This clause seeks to amend section 6A of the principal Act to change the requirement of previous approval by Authority for registration of transfer of shares from one per cent. to five per cent. of paid-up equity capital of insurer to facilitate the ease of doing business and reduce compliance burden on insurers.
Clause 10.—This clause seeks to amend section 6B of the principal Act consequent to insertion of definition of “insurance business” in the said Act.
Clause 11.—This clause seeks to amend section 10 of the principal Act to substitute the reference of Controller with the Authority.
Clause 12.—This clause seeks to amend section 11 of the principal Act to provide for preparation of other financial statements, at the expiration of each financial year by the insurers.
Clause 13.—The clause seeks to insert new section 12A in the principal Act to empower the Authority to specify the eligibility criteria and experience for appointment of an actuary.
Clause 14.—This clause seeks to amend section 13 of the principal Act to omit the word “abstract” and to provide for investigation by an actuary of liabilities and financial condition of every insurer to bring all insurers and re-insurers under the same reporting framework.
Clause 15.—This clause seeks to amend section 14 of the principal Act and insert new sections 14A, 14B and 14C in the said Act to require the insurers to maintain complete record of policies issued by them, to provide for processing of policyholders’ information by the insurers in accordance with the regulations specified by the Authority, to ensure accuracy and security of policyholders’ information and to ensure confidentiality of such information.
Clause 16.—This clause seeks to amend section 15 of the principal Act to facilitate electronic submission of returns.
Clause 17.—This clause seeks to amend section 21 of the principal Act to update and streamline provisions.
Clause 18.—This clause seeks to amend section 22 of the principal Act to update and streamline provisions.
Clause 19.—This clause seeks to amend section 26 of the principal Act to update and streamline provisions.
Clause 20.—This clause seeks to amend section 27 of the principal Act to empower the Authority to specify by regulations, the time, manner and other conditions of the investment of assets by insurers.
Clause 21.—This clause seeks to omit sections 27A, 27B, 27C and 27D of the principal Act consequential to substitution of section 27 relating to investment of assets by insurers.
Clause 22.—This clause seeks to amend section 30 of the principal Act to update and streamline provisions consequential to omission of sections 27A, 27B, 27C and 27D of the said Act.
Clause 23.—This clause seeks to amend section 31 of the principal Act consequential to substitution of section 27 relating to investment of assets by insurers.
Clause 24.—This clause seeks to amend section 31A of the principal Act to simplify the provision of the said Act.
Clause 25.—This clause seeks to substitute section 32A of the principal Act to extend the prohibition regarding appointment of common managing director and other officers to all insurers.
Clause 26.—This clause seeks to amend section 32B of the principal Act consequential to insertion of definition of insurance business and to extend the obligation of carrying out business in rural and social sectors to all classes of insurance business.
Clause 27.—This clause seeks to amend section 32C of the principal Act consequential to insertion of definition of insurance business and to extend the obligation of carrying out business in respect of rural or unorganised sector and backward classes of the society, to all classes of insurance business.
Clause 28.—This clause seeks to amend section 33 of the principal Act to insert the word “insurance intermediary” in clause (a) of sub-section (6), to extend the power of the Authority to inspect and investigate to insurance intermediaries.
Clause 29.—This clause seeks to amend section 33A of the principal Act to empower the Authority to appoint staff for the scrutiny of the returns, statements and information furnished by insurance intermediary.
Clause 30.—This clause seeks to amend section 34 of the principal Act to empower the Authority to issue directions to insurance intermediary and to clarify the scope of such directions including disgorgement of wrongful gain made or loss averted.
Clause 31.—This clause seeks to amend section 34A of the principal Act to substitute redundant provisions of law with the latest provisions of law.
Clause 32.—This clause seeks to amend section 34H of the principal Act to extend the power of Authority regarding search and seizure over insurance intermediary also.
Clause 33.—This clause seeks to amend section 35 of the principal Act to empower the Authority to approve a scheme of arrangement, including a merger, demerger, reverse merger etc. between an insurer and any company not engaged in the insurance business.
Clause 34.—This clause seeks to amend section 37 of the principal Act to substitute the redundant provisions of the said Act.
Clause 35.—This clause seeks to amend section 37A of the principal Act to substitute “Controller” with “Authority”.
Clause 36.—This clause seeks to amend section 40 of the principal Act to empower the Authority to specify the limits of any commission, remuneration or reward in any form payable to an insurance agent or insurance intermediary in the interest of policyholders.
Clause 37.—This clause seeks to amend the marginal heading of section 40B of the principal said Act.
Clause 38.—This clause seeks to amend the marginal heading of section 40C of the principal said Act.
Clause 39.—This clause seeks to amend section 41 of the principal Act to extend the exception from prohibition of rebates on certain commissions from life insurance to all classes of insurance business.
Clause 40.—This clause seeks to amend section 42D of the principal Act to provide for detailed procedure for registration, suspension and cancellation of insurance intermediary by the Authority.
Clause 41.—This clause seeks to amend section 47 of the principal Act to extend to all insurers, the provision on payment of money in the court in case of any dispute in relation to a policy of insurance.
Clause 42.—This clause seeks to amend section 48B of the principal Act to update and streamline the provisions of the said Act.
Clause 43.—This clause seeks to amend section 49 of the principal Act to extend restrictions on declaration of the dividends out of surplus to all insurers.
Clause 44.—This clause seeks to amend section 51 of the principal Act to revise the fee for supply of certified copies of the questions put to insurer by policyholder.
Clause 45.—This clause seeks to amend section 52A of the principal Act to empower the Authority to supersede the Board of Directors of an insurers where an administrator has been appointed.
Clause 46.—This clause seeks to amend section 55 of the principal Act to substitute the redundant provision of law with latest provision of law.
Clause 47.—This clause seeks to amend section 61A of the principal Act to put an obligation on Appellate authority to record reasons, if appeal is not disposed of within the time specified in the Act.
Clause 48.—This clause seeks to amend section 64 of the principal Act to enable the Authority to determine by order the time within which certificate from the auditor regarding the submission of books of account and other documents.
Clause 49.—This clause seeks to amend section 64F of the principal Act to broad base membership of the Life Insurance Council and General Insurance Council and to provide for membership of two persons to be nominated by the Central Government in both Councils.
Clause 50.—This clause seeks to amend section 64G of the principal Act to make the Act gender neutral.
Clause 51.—This clause seeks to amend section 64H of the principal Act to align the usage of the defined term “General Insurance Council” with the provisions of the said Act.
Clause 52.—This clause seeks to amend section 64K of the principal Act to omit the redundant provisions.
Clause 53.—This clause seeks to amend section 64L of the principal Act to bring health insurance and re-insurance business within scope of functions of General Insurance Council and to align with section 64C of the said Act.
Clause 54.—This clause seeks to amend section 64M of the principal Act to omit the redundant provisions of the said Act.
Clause 55.—This clause seeks to amend section 64R of the principal Act to empower the Life Insurance Council and the General Insurance Council to lay down the required fee in bye-laws and to align with section 64R(1)(d)(iv) of the said Act.
Clause 56.—This clause seeks to omit section 64ULA of the principal Act to omit the redundant provisions of the said Act.
Clause 57.—This clause seeks to amend section 64VB of the principal Act to cover the instances of online payment of premium.
Clause 58.—This clause seeks to amend section 101A of the principal Act to provide clarity in relation to percentage of sum assured.
Clause 59.—This clause seeks to amend section 102 of the principal Act to include non-compliances under the Insurance Regulatory and Development Authority Act, 1999 for penalty and rationalise the minimum penalty and the maximum amount.
Clause 60.—This clause seeks to amend section 104 of the principal Act to omit reference to redundant provisions consequent to omission of sections 27A, 27B and 27D of the said Act.
Clause 61.—This clause seeks to insert new section 105BA in the principal Act to move the penal provisions from section 42D to section 105BA and to specify the minimum threshold of penalty.
Clause 62.—This clause seeks to amend section 105C of the principal Act to make changes consequent to amendments made in penalty provisions of the said Act.
Clause 63.—This clause seeks to insert section 105E in the principal Act to provide for the factors that must be taken into account by the Authority while determining the penalty under the said Act.
Clause 64.—This clause seeks to amend section 106 of the principal Act to omit the redundant provisions.
Clause 65.—This clause seeks to amend section 110B of the principal Act to omit the redundant provisions.
Clause 66.—This clause seeks to amend section 110F of the principal Act to substitute redundant provisions with latest provisions of law.
Clause 67.—This clause seeks to amend section 114 of the principal Act to amend rule making powers.
Clause 68.—This clause seeks to amend section 114A of the principal Act to make changes in the regulation making powers and to provide for transparency in the regulation making process by requiring public consultations and periodic review of the regulations.
Clause 69.—This clause seeks to insert new sections 114B and 114C in the principal Act to provide for issuance of subsidiary instructions by the Chairperson or the whole-time Members of the Authority to clarify the ambiguity in any regulation or for laying down the procedural requirements ancillary to any regulation, in consultation with a Consultative Committee constituted by the Authority.
Clause 70.—This clause seeks to omit section 115 of the principal Act to update and streamline provisions.
Clause 71.—This clause seeks to amend section 116 of the principal Act to update and streamline provisions and to provide for laying of orders under this section before each House of Parliament.
Clause 72.—This clause seeks to amend section 116A of the principal Act to update and streamline provisions of the said Act.
Clause 73.—This clause seeks to amend section 117 of the principal Act to update and streamline provisions of the said Act.
Clause 74.—This clause seeks to amend section 118 of the principal Act to update and streamline provisions of the said Act.
Clause 75.—This clause seeks to amend section 119 of the principal Act to empower Authority to specify the fee for inspection and taking a copy of documents submitted by insurer with the Authority.
Clause 76.—This clause seeks to omit section 120 of the principal Act to update and streamline provisions of the said Act.
Clause 77.—This clause seeks to amend section 2 of the Life Insurance Corporation Act, 1956 (Insurance Corporation Act) to omit, update and streamline provisions of the said Act.
Clause 78.—This clause seeks to amend section 6A of the Insurance Corporation Act to update the references to the Companies Act, 2013.
Clause 79.—This clause seeks to amend section 18 of the Insurance Corporation Act to empower the Corporation to establish zonal offices on its own, without prior approval of the Central Government.
Clause 80.—This clause seeks to amend section 22 of the Insurance Corporation Act so as to provide the manner of constitution of an Employees and Agents Relation Committee to be determined by the Corporation.
Clause 81.—This clause seeks to amend section 24 of the Insurance Corporation Act to provide the overseas branches of the Corporation to maintain the funds of the branch or office in accordance with the laws of that country.
Clause 82.—This clause seeks to amend section 28 of the Insurance Corporation Act to provide the overseas branches of the Corporation to utilise the surplus in such branch or office in accordance with the laws of that country.
Clause 83.—This clause seeks to amend section 30A of the Insurance Corporation Act to make it mandatory for the Corporation to comply with the provisions of the Insurance Act, 1938 as applicable to it by virtue of the section 43 of the Insurance Corporation Act.
Clause 84.—This clause seeks to amend section 43 of the Insurance Corporation Act to omit references to outdated provisions of the said Act.
Clause 85.—This clause seeks to amend section 44 of the Insurance Corporation Act to omit reference to a redundant provision of the said Act.
Clause 86.—This clause seeks to amend section 48 of the Insurance Corporation Act to omit the reference to rule-making power for the manner of constitution of an Employees and Agents Relation Committee.
Clause 87.—This clause seeks to amend section 2 of the Insurance Regulatory and Development Authority Act, 1999 (Insurance Authority Act) to modify and substitute the definition of insurance intermediary of the said Act.
Clause 88.—This clause seeks to amend section 4 of the Insurance Authority Act to include knowledge and experience of information technology among desirable qualifications for appointment as member of Authority.
Clause 89.—This clause seeks to amend section 5 of the Insurance Authority Act to bring parity in the age limit for holding office among Chairperson and whole-time members.
Clause 90.—This clause seeks to amend section 14 of the Insurance Authority Act to update and streamline provisions of the said Act.
Clause 91.—This clause seeks to insert new sections 14A, 14B, 14C, 14D and 14E in the Insurance Authority Act to empower the Authority for collecting information relation to policies and claims from insurers and other regulated entities for efficient discharge of its functions, and to regulate and develop the insurance business.
Clause 92.—This clause seeks to amend section 16 of the Insurance Authority Act to allow for the annual surplus funds of IRDAI to be kept in a Reserve Fund and post all expenses by the Authority and provide for transfer of the surplus to the Consolidated Fund of India.
Clause 93.—This clause seeks to insert new section 16A in the Insurance Authority Act to allow for creation of a Policyholders’ Education and Protection Fund.
Clause 94.—This clause seeks to amend section 23 of the Insurance Authority Act to enable the Authority to delegate functions to the Chairperson or any other member or officer of the Authority, other than the powers to frame regulations and grant of registration to insurer.
Clause 95.—This clause seeks to amend section 26 of the Insurance Authority Act to make the regulation process more transparent and inclusive and to align the provision with the corresponding change in section 114A of Insurance Act, 1938.
FINANCIAL MEMORANDUM
The provisions of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, if enacted, do not involve any expenditure of recurring or non-recurring, from and out of the Consolidated Fund of India.
MEMORANDUM REGARDING DELEGATED LEGISLATION
Clause 67 of the Bill proposes to amend section 114 of the Insurance Act, 1938 (“Act”) which empowers the Central Government to make rules to carry out the purposes of the Act, relating to the conditions of foreign investment under sub-section (2) of section 3AA.
2. Clause 68 of the Bill proposes to amend section 114A of the Act which empowers the Insurance Regulatory and Development Authority of India, to make regulations to carry out the purposes of the Act. The Authority shall ensure transparency in making regulations by publishing draft regulations on its website for inviting public comments prior to issuing such regulations. The Authority shall make regulations on the following matters, namely:—(i) the preparation of balance-sheet, profit and loss account and a separate account of receipts and payments and revenue account and other financial statements under sub-section (1) of section 11; (ii) the eligibility criteria and other conditions for an actuary under section 12A; (iii) the purpose for which and the manner in which the report of the actuary is to be submitted and the form and manner in which the statement shall be appended under section 13; (iv) the form, manner and period for submission of returns to the Authority under section 15; (v) the manner of execution of instrument of Trust by the insurer under sub-section (5) of section 27; (vi) the investment of assets by an insurer in a time and manner set out under section 27; (vii) the form in which balance-sheets in respect of the insurance business of each of the insurers concerned and the manner in which actuarial reports and abstracts in respect of the insurance business shall be prepared under clauses (b) and (c) of sub-section (3) of section 35, and the manner, procedure and other conditions for a scheme of arrangement or amalgamation or transfer of business under sub-section (4) of section 35; (viii) the form and manner of making application for registration, the documents to be accompanied and the fee to be paid under sub-section (3) of section 42D; (ix) any other default subject to which the registration may be suspended or cancelled under clause (viii) of sub-section (6) of section 42D; (x) the annual fee in relation to registration under sub-section (4A) of section 42D and the procedure for suspension or cancellation of registration under the said sub-section; (xi) the fee for issuance of duplicate certificate of registration under sub-section (8) of section 42D; (xii) the period, extent and conditions under which certain insurers may be exempted by Authority under sub-section (3) of section 48B; (xiii) fee to be paid for inspection of the documents filed by an insurer with the Authority and obtaining a copy of said document or part thereof under section 119; (xiv) the manner and conditions of making subsidiary instructions under section 114B; and (xv) the manner of the constitution of Consultative Committees under section 114C.
3. Clause 69 of the Bill seeks to insert section 114B of the Act, which empowers the Chairperson or one or more whole-time Members of the Authority to issue subsidiary instructions in such manner and subject to such conditions as may be specified by regulations for (i) clarifying the ambiguity of any regulation, if any; and (ii) laying down any procedural requirement ancillary to any regulation.
4. The matters in respect of which rules and regulations may be made or subsidiary instructions issued are matters of procedure or administrative detail and it is not practicable to provide for them in the Bill itself. The delegation of legislative power is, therefore, of a normal character.
