The Insurance Bill, scheduled for the winter session, aims to increase the FDI limit to 100% | Photo credit: scyther5
The Bulletin of the Lok Sabha has listed the Insurance (Amendment) Acts for introduction, consideration and passage. The bill aims to “deepen penetration, accelerate the growth and development of the insurance sector and facilitate ease of doing business,” the bulletin said. The bill aims to address the key announcement of the FY26 budget, which is to increase the FDI limit from 74 to 100 percent in the insurance sector. This increased limit will be available to companies that invest the entire premium in India. The current guardrails and conditions related to foreign investment will be revised and simplified.
The framework of the bill is based on a proposal submitted by the Financial Services Department in November last year when it sought comments on the proposed amendments to three laws: Insurance Act 1928, Life Insurance Corporation Act 1956 and Insurance Regulatory and Development Authority Act, 1999. It said the amendments are proposed to “ensure accessibility and affordability of insurance to citizens, promote the expansion and development of the insurance sector and streamline business processes.”
The proposed changes are expected to establish the framework for composite licensing, allowing insurers to offer multiple categories of insurance (life, health and general) under a single licence. This is expected to increase operational flexibility, streamline regulatory processes and promote innovation. This is an important initiative to increase insurance penetration and thus achieve the goal of ‘Insurance for All by 2047’.
The bill is also expected to give IRDAI the power to specify lower entry capital (not less than ₹50 crore) for underserved segments in special cases. At the same time, the net equity requirement for foreign reinsurers is proposed to be reduced from ₹5,000 crore to ₹1,000 crore.
Speaking about the proposal to increase the FDI limit, the Financial Services Department told a parliamentary panel that the objectives of such a move include unlocking the full potential of the Indian insurance sector, which is expected to grow at 7.1 percent per annum over the next five years, faster than global and emerging market growth. “Removing the FDI cap will also attract stable and sustainable foreign investment, increase competition, facilitate technology transfer and improve insurance penetration across India,” the report said.
Further, the report said that India’s FDI norms, in line with global best practices, will position the country as an attractive destination for foreign investors. Countries such as Canada, Brazil, Australia and China allow 100 percent foreign direct investment in their insurance sector.
“The provisions of the Indian Insurance Companies (Foreign Investment) Rules, 2015, which prescribe conditions relating to appointment of key management personnel, composition of Board of Directors, repatriation of dividends etc. will be revised to create a conducive atmosphere in which more foreign direct investment can be brought into the insurance sector, thereby boosting its growth and enabling inflow of the best talent and knowledge transfer to India,” the ministry said.
The government hopes that a higher FDI limit will mean greater foreign participation, which will lead to more players in the market, more competition, better products, better customer service and more affordable premiums, ultimately improving insurance penetration and density, thereby reducing the protection gap.
Published on November 22, 2025
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