The government has approved major changes in the insurance sector through the Insurance Amendment Bill 2025, titled “Sabka Bima Sabki Raksha.”
The main aim of this bill is to expand the insurance sector and make insurance more accessible to people. A key decision under this bill is allowing 100% Foreign Direct Investment (FDI) in the insurance sector.
The bill also brings important changes that give more independence to LIC and more power to the insurance regulator IRDAI.
How Will the New Insurance Bill Benefit Customers?
The new bill introduces changes to the Insurance Act 1938, LIC Act 1956, and IRDAI Act 1999. These changes are meant to make insurance simpler and more customer-friendly.
By increasing FDI from 74% to 100%, more foreign companies will be able to enter the Indian insurance market.
This will increase competition among insurance companies. As a result, insurance policies may become cheaper and more attractive.
With higher competition, customers are expected to get better services, faster claim settlements, and more policy options.
More Freedom for LIC: What Does It Mean for Customers?
The new insurance law amends the LIC Act of 1956, giving the Life Insurance Corporation of India (LIC) greater independence. LIC will no longer need government approval for every decision.
LIC will be able to launch new policies, open offices, and make appointments on its own. This freedom will help LIC respond faster to market changes and customer needs.
How Much Will LIC Change After the New Law?
With increased powers, LIC will find it easier to expand its services, both in India and abroad. It can adjust its overseas units according to local laws without seeking government approval.
This will help LIC compete more effectively with private insurers. Faster decisions, quicker policy launches, and improved claim processing will ultimately benefit millions of LIC policyholders.
IRDAI Gets More Powers
The new bill strengthens the role of the Insurance Regulatory and Development Authority of India (IRDAI). The regulator will now have the power to recover illegal gains.
It also introduces registration for insurance agents and intermediaries. In addition, the approval limit for share transfers has been increased from 1% to 5%, making business operations smoother.
What Is Missing in the New Insurance Bill?
Despite several reforms, the bill does not introduce a composite license. This means insurance companies cannot sell life, general,
and health insurance under one license. Customers will still not be able to get all insurance services from a single company.
The bill also does not reduce the minimum capital requirement. Insurance agents are still not allowed to sell products from multiple insurance companies.
