Rajya Sabha Clears Legislation
Parliament on Wednesday approved legislation to increase foreign direct investment (FDI) in the insurance sector to 100%, up from the existing 74%, a move aimed at expanding insurance coverage, lowering premiums, and generating employment.
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 was passed by the Rajya Sabha through a voice vote, a day after it was cleared by the Lok Sabha. The Upper House also rejected amendments moved by Opposition members, including a proposal to refer the bill to a parliamentary standing committee.
Government Defends Reform
Replying to the debate, Finance Minister Nirmala Sitharaman said the amendments would enable foreign insurers to bring in greater capital and technology, thereby strengthening the sector.
She said opening up the insurance sector in earlier phases had already improved insurance penetration and that “there is scope for much more”.
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Boost to Competition and Lower Premiums
The Finance Minister said increasing the FDI cap to 100% would encourage more global insurers to enter the Indian market, noting that many foreign firms hesitate to invest due to the lack of suitable joint venture partners.
“With more players entering the sector, competition will increase, and insurance premiums are expected to come down,” she said.
Employment and Consultation Assurances
Addressing concerns over job losses, Sitharaman said the sector would instead witness higher employment generation. She cited data showing that jobs in the insurance industry have nearly tripled since the FDI cap was raised from 26% to 74%.
She also rejected Opposition claims that the bill was rushed, stating that the proposal had undergone nearly two years of consultations.
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Key Provisions of the Bill
The legislation amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
It also allows for the merger of non-insurance companies with insurance firms and provides for the establishment of a Policyholders’ Education and Protection Fund, aimed at safeguarding consumer interests.
According to the statement of objects and reasons, the bill seeks to accelerate growth in the insurance sector while ensuring better protection for policyholders.
