Finance Minister Nirmala Sitharaman on Monday tabled the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, in the Lok Sabha. The proposed legislation seeks to amend the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.

Finance Minister Nirmala Sitharaman on December 16 tabled a Bill in the Lok Sabha that proposes allowing up to 100% foreign direct investment in the insurance sector, a move aimed at expanding coverage and achieving universal insurance by 2047.

Hanut Mehta, CEO and Co-Founder at BimaPay Finsure on the introduction of insurance amendment bill in Lok Sabha to hike FDI in sector to 100%, said, "The introduction of the Insurance Amendment Bill in the Lok Sabha, proposing to allow up to 100% FDI in the insurance sector, is a structural step that can meaningfully reshape India’s insurance ecosystem. Higher foreign participation is likely to bring in long-term capital, global underwriting expertise, and improved product innovation, all of which can support deeper insurance penetration across segments."

From the standpoint of an insurance premium financing company, this move has important downstream implications. "As insurers gain access to larger balance sheets and global best practices, we can expect greater product diversification, higher ticket-size policies, and increased focus on corporate and MSME insurance. This naturally raises the need for flexible premium payment solutions, especially for businesses that may want," said Mehta.

Proposing up to 100% foreign ownership in the insurance industry would represent a dramatic structural change for this segment of the market. If this proposal is implemented with due consideration, increased foreign investment will provide insurers with access to long-term capital, globally proven best practices in Corporate Governance, and improved technical capabilities for underwriting and claims management.

Arun Ramamurthy, Co-founder, Staywell.Health, said, "The true impact of this change will not be determined solely by the percentage of foreign ownership but rather, how well these new sources of capital will be put to use. To provide value for policyholders, the impact of foreign investment will only be realised if insurance companies invest these funds into the areas that need strengthening (i.e., clarifying processes, transparency, and overall service quality, in their addictions to achieve quicker and fairer claims resolution); as this is a critical factor for building trust in the insurance ecosystem."

From the regulatory aspect of maintaining a high level of regulatory oversight to ensure that there is alignment of increased foreign investment with domestic marketplace stability and consumer architecture, the focus should be on building competitive market environments based upon delivering on customer outcomes, rather than just increasing balance sheet size.

"Through improved governance, continued development of risk management practices, and a better understanding of their customer’s needs, increased FDI could have a positive influence on developing greater levels of penetration in the Indian insurance market and enhancing long-term trust," said Ramamurthy.