Vijayan emphasized that strengthening the operational aspects of insurance companies requires more than just increasing capital. Over the past decade, the number of employees in these companies has drastically decreased, from approximately 16,000 to around 7,000 per company. This significant reduction in workforce has likely impacted the efficiency and effectiveness of these organizations.

According to Vijayan, it is essential to not only boost capital but also to augment manpower. The process of listing companies can lead to improved capitalization, which can be achieved through various means such as initial public offerings (IPOs) or private equity investments. Furthermore, mergers can also play a crucial role in strengthening these companies. By combining resources and operations, merging companies can eliminate redundancies, reduce costs, and enhance their overall competitiveness.

The ultimate goal, Vijayan stressed, is to achieve economies of scale, which is a critical factor in the insurance industry. Currently, only the Life Insurance Corporation of India (LIC) enjoys this advantage, which has enabled it to maintain its market dominance. Economies of scale allow companies to reduce costs, improve efficiency, and increase profitability, ultimately leading to better services and products for customers.

In the context of the insurance industry, achieving economies of scale can be particularly challenging due to the high capital requirements and intense competition. However, by focusing on operational strengthening, increasing manpower, and pursuing strategic mergers, insurance companies can position themselves for long-term success. Vijayan’s comments highlight the need for a comprehensive approach to strengthening the insurance industry, one that goes beyond mere capitalization and addresses the critical issue of manpower and scale.

The insurance industry is expected to play a vital role in the country’s economic growth, and it is essential that companies in this sector are equipped to meet the evolving needs of customers. By prioritizing operational strengthening, manpower augmentation, and strategic consolidation, insurance companies can build a strong foundation for future growth and success. As Vijayan noted, this will ultimately benefit not only the companies themselves but also the customers they serve, who will have access to a wider range of products and services.

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.

The Indian government has introduced the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, aiming to revolutionize the country’s insurance sector. The bill proposes significant changes to the Insurance Act, 1938, the LIC Act, 1956, and the IRDA Act, 1999, with the goal of achieving universal protection by 2047. Key features of the bill include raising foreign direct investment (FDI) in the insurance sector from 74% to 100%, with the condition that one of the top officials must be an Indian citizen.

The bill also allows for sector-specific licenses, enabling insurers to operate in niche lines such as cyber, property, or marine insurance. Additionally, it permits mergers between non-insurance and insurance companies, and shifts from detailed statutory prescriptions to a regulation-driven framework, giving the Insurance Regulatory and Development Authority of India (IRDA) the authority to set operational norms.

Other notable provisions include establishing a Policyholders’ education and protection fund, expanding the definition of insurance intermediaries, and easing licensing requirements for surveyors and loss assessors. The bill also allows the Life Insurance Corporation (LIC) to establish zonal offices without prior approval from the Centre and enables overseas branches to maintain funds.

The government believes that the bill will accelerate growth, improve policyholder protection, bring transparency to regulations, and attract significant investments, creating more opportunities for insurers and intermediaries across India. The move to raise FDI to 100% is expected to attract more foreign investment, with the sector having already attracted Rs 82,000 crore through FDI. The bill is part of the government’s new-generation financial sector reforms, and its passage is expected to have a significant impact on the Indian insurance sector. Overall, the bill aims to make insurance coverage more accessible and affordable for all, and to establish India as a major player in the global insurance market.