The New Insurance Bill, 2025, also known as the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, is a significant milestone in India’s financial sector reforms. The Bill aims to modernize India’s insurance ecosystem, expand coverage, and strengthen regulatory oversight. It was approved by the Union Cabinet and is set to be introduced in Parliament. The Bill’s primary objectives are to deepen insurance penetration across India, attract long-term domestic and foreign investment, improve regulatory effectiveness and transparency, promote innovation and competition in insurance products, strengthen policyholder protection, and support inclusive growth and financial security.
The key provisions of the New Insurance Bill, 2025, include allowing 100% Foreign Direct Investment (FDI) in the insurance sector, liberalization for foreign reinsurers, stronger powers for the Insurance Regulatory and Development Authority of India (IRDAI), and greater operational autonomy for the Life Insurance Corporation (LIC). The 100% FDI limit is expected to attract global insurers and long-term capital, aligning with India’s ambition to achieve universal insurance coverage by 2047. The Bill also reduces the Net Owned Funds (NOF) requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore, encouraging foreign reinsurance players beyond public-sector GIC Re.
The Bill significantly enhances the role of IRDAI, granting it disgorgement powers to recover unlawful gains, one-time registration for insurance intermediaries, and a higher threshold for IRDAI approval of equity transfers. Additionally, the Bill provides greater operational autonomy for LIC, allowing it to open new zonal offices without government approval and restructure overseas operations as per host-country regulations. However, the Bill leaves out some notable provisions, including composite licenses, reduction in capital requirements, and provision for captive insurance companies.
The absence of composite licenses means that insurers will continue to operate in silos, with life and non-life insurance remaining separate. The minimum capital norms also remain unchanged, which may limit innovation and financial inclusion, especially in underserved areas. The Bill’s silence on captive insurance companies delays the evolution of India’s corporate risk ecosystem. Despite these exclusions, the New Insurance Bill, 2025, is a significant step toward transforming India’s insurance landscape. It lays the foundation for deeper insurance penetration and global integration, and its provisions are expected to encourage global participation in India’s growing insurance market, supporting economic resilience by spreading risk and improving financial security. As the Bill is debated in Parliament, the gaps in the Bill are likely to shape discussions on how far and how fast India should liberalize its insurance sector.