Lok Sabha Approves Insurance coverage Modification Invoice for 100% FDI in Insurance coverage Sector

The Lok Sabha on Tuesday handed the Insurance coverage Modification Invoice, paving the way in which for permitting as much as 100 per cent international direct funding (FDI) in insurance coverage corporations, a transfer the federal government says will deepen capital flows and strengthen the sector.

The laws, cleared earlier by the Union Cupboard chaired by Prime Minister Narendra Modi final week, removes the present cap on international possession and introduces a set of structural reforms aimed toward enhancing governance, boosting competitors and increasing insurance coverage penetration.

In line with a Lok Sabha bulletin, the Insurance coverage Legal guidelines (Modification) Invoice, 2025 is designed to speed up progress and improvement within the insurance coverage sector whereas additionally enhancing the benefit of doing enterprise. The proposal to boost the FDI restrict was first introduced by Finance Minister Nirmala Sitharaman in her Price range speech earlier this yr as a part of a broader push to reform the monetary sector.
At current, the insurance coverage business has attracted round Rs 82,000 crore in international direct funding. Authorities officers consider that permitting full international possession will unlock recent capital, assist product innovation and assist insurers increase their attain, particularly in underpenetrated segments.

The amendments contain modifications to a number of legal guidelines, together with the Insurance coverage Act, 1938, the Life Insurance coverage Company Act, 1956 and the Insurance coverage Regulatory and Improvement Authority Act, 1999. Proposed revisions to the Insurance coverage Act embrace elevating the FDI cap to 100 per cent, rationalising paid-up capital necessities and introducing a composite licensing framework.

Adjustments to the LIC Act are aimed toward giving the insurer’s board larger operational autonomy, together with selections associated to department enlargement and staffing. The federal government has mentioned the broader goal of the overhaul is to strengthen policyholder safety, improve monetary resilience and encourage extra gamers to enter the market, supporting financial progress and job creation.
Officers added that the reforms are aligned with the long-term objective of enhancing insurance coverage penetration and reaching the imaginative and prescient of “Insurance coverage for All by 2047,” whereas modernising the regulatory framework constructed across the Insurance coverage Act of 1938.