Insurance Laws Amendment Bill Targets Full Foreign Ownership and Market Expansion

Insurance Bill Proposes 100% FDI to Boost Sector Growth

The government has introduced a major reform proposal for India’s insurance industry by listing the Insurance Laws (Amendment) Bill for consideration in the upcoming winter session of Parliament. The proposed amendments seek to modernise the regulatory framework, attract deeper foreign investment, and widen insurance access across India’s underserved regions.

FDI Cap Raised to 100% for Select Insurers

A central feature of the Bill is the proposal to increase the foreign direct investment limit from 74% to 100% for insurance companies that invest their entire premium income within India. The move, aligned with the FY26 Budget commitment, aims to draw sustained global capital and simplify complex ownership rules. By easing restrictions, the government intends to improve investor confidence and enable long-term capital inflows.

Comprehensive Amendments Across Insurance Laws

The draft Bill revises key provisions of three major legislations— the Insurance Act, 1928; LIC Act, 1956; and the IRDAI Act, 1999 . These changes aim to streamline oversight, reduce operational hurdles, and make insurance products more affordable. Enhancing access and improving penetration, especially in rural and semi-urban areas, remain central policy goals.

Composite Licences to Support Market Innovation

A notable reform includes the introduction of composite licences , allowing insurers to offer life, general, and health insurance under a single regulatory permit. This structural shift is expected to lower compliance costs, encourage product diversification, and help insurers innovate faster. The proposal supports India’s vision of achieving “Insurance for All by 2047.”

Exam Oriented Facts

• Proposed FDI rise: 74% → 100% .

• Composite licences to cover life + health + general insurance.

• IRDAI may set minimum entry capital as low as ₹50 crore for certain categories.

• Net Owned Fund requirement for foreign reinsurers may reduce to ₹1,000 crore .