The bill could be introduced during the ongoing winter session of Parliament, which is expected to end on December 19.
According to a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025, which aims to deepen penetration, accelerate the growth and development of the insurance sector and facilitate ease of doing business, is part of the 13 legislations listed for the upcoming session of Parliament.
Finance Minister Nirmala Sitharaman in this year’s Budget speech proposed increasing the foreign investment limit to 100 percent from the current 74 percent in the insurance sector as part of the new-generation financial sector reforms.
So far, the insurance sector has attracted ₹82,000 crore through foreign direct investment (FDI).
The Finance Ministry has proposed to amend several provisions of the Insurance Act, 1938, including increasing FDI in the insurance sector to 100 percent, reducing paid-up capital and introducing composite licensing.
As part of an extensive legislative exercise, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999 will be amended, in addition to the Insurance Act 1938.
The amendments in the LIC Act propose to give the board the power to make operational decisions such as expansion of branches and recruitment.
The proposed amendment is primarily aimed at promoting the interests of policyholders, increasing their financial security and facilitating the entry of additional players into the insurance market, thereby stimulating economic growth and job creation.
Such changes will help increase the efficiency of the insurance industry, improve ease of doing business and increase insurance penetration to achieve the goal of ‘Insurance for All by 2047’.
The Insurance Act, 1938 serves as the main law that provides the legislative framework for insurance in India. It provides the framework for the functioning of insurance companies and regulates the relationships between insurers, their policyholders, shareholders and the regulator Irdai.
Published on December 12, 2025
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