The Union Cabinet on Friday approved the Insurance Amendment Bill 2025, paving the way for a major round of reforms.
The Union Cabinet on Friday approved the Insurance Amendment Bill 2025, paving the way for a major round of reforms. The bill is expected to be passed during the current winter session of Parliament.
‘A progressive step’
“Opening up the sector to 100 per cent foreign direct investment will certainly be a welcome and progressive step. Increased foreign participation can bring fresh ideas, global product innovation, digital capabilities and new service models that ultimately improve the customer experience. Any step that broadens the innovation horizon of the sector will be positive for long-term penetration,” said Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance. business line.
If the composite permit proposal is approved, it would mark a remarkable shift in the evolution of the sector. Both life and health insurance remain underexplored, and allowing insurers to participate in different categories can help create more holistic solutions, greater efficiency and a stronger customer proposition, Rao said.
Sharad Mathur, MD and CEO, Universal Sompo General Insurance, said:“Increasing the FDI limit to 100 percent can serve as a strong catalyst for the insurance sector. Greater capital inflows will enable insurers to expand their operations, strengthen their balance sheets and invest in advanced risk assessment models and more efficient claims management systems.
Overall, this move for the general insurance market could lead to better use of data, more accurate pricing and more sustainable product innovation, ultimately making the sector more resilient and better equipped to serve people at optimal levels, he added.
Transformative
The Cabinet’s approval of the Insurance Amendment Bill, 2025 – especially the decision to allow 100 percent FDI in insurance, is a major, transformative reform for the sector and a decisive step towards achieving the vision of Insurance for All by 2047, said Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI).
From an insurer’s perspective, greater availability of capital will support deeper penetration into underinsured and rural markets, facilitate the development of specialty products such as healthcare, catastrophe, cyber and longevity coverage, and enable companies to make sustainable investments in distribution, digital infrastructure and human capital.
At the same time, as the sector continues to open up, it is essential that growth remains anchored in strong governance, robust solvency standards and uncompromising policyholder protection. Regulatory clarity, effective supervision and a level playing field will be critical to ensuring that increased competition translates into better outcomes for consumers, according to IBAI Chief.
Sarbvir Singh, CEO of Joint Group, PB Fintech, said the proposed changes would bring clarity, confidence and long-term capital to a growing sector. “Global expertise and sustainable investments can help accelerate innovation, improve the consumer experience and expand access across the country. This move is well-positioned to increase overall service quality, unlock significant new capital and support India’s long-term vision for broader insurance coverage,” he said.
Published on December 12, 2025
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