Union Cabinet Clears Bill Allowing 100 Per Cent Foreign Direct Investment (FDI) in Insurance Sector

Key facts

• The Union Cabinet approved a bill to raise Foreign Direct Investment (FDI) in the insurance sector to 100 per cent.
• The proposed legislation is the Insurance Laws (Amendment) Bill, 2025.
• Finance Minister Nirmala Sitharaman announced the proposal in the Union Budget this year.
• The insurance sector has attracted around Rs 82,000 crore in foreign investment.
• The bill proposes amendments to the Insurance Act, 1938, allowing up to 100 per cent FDI.
• It permits mergers between insurance and non-insurance companies.
• The bill creates a dedicated policyholders’ fund.
• A requirement mandates that at least one key management position, such as chairman, managing director or CEO, must be held by an Indian citizen.
• Existing net worth requirements for insurers will remain unchanged.
• Amendments are also proposed to the Life Insurance Corporation (LIC) Act, 1956.
• Changes to the LIC Act would empower its board to take operational decisions such as branch expansion and recruitment.
• Amendments are also proposed to the Insurance Regulatory and Development Authority (IRDA) Act, 1999.