{"id":61679,"date":"2025-12-15T19:15:17","date_gmt":"2025-12-15T13:45:17","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=61679"},"modified":"2025-12-17T11:32:27","modified_gmt":"2025-12-17T06:02:27","slug":"insurance-laws-amendment-bill","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/15-12-2025\/insurance-laws-amendment-bill","title":{"rendered":"Amendment of Insurance Laws Bill, 2025"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Governance; GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Union Cabinet approved the <strong>Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Bill seeks to <strong>revamp India\u2019s insurance framework,<\/strong> proposing changes to the: Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999.<\/li>\n\n\n\n<li><strong>Aim<\/strong>: Modernisation, wider coverage and stronger regulatory oversight.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Features<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>100% FDI: <\/strong>The amendment will raise the <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/21-05-2022\/the-foreign-direct-investment-fdi\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/21-05-2022\/the-foreign-direct-investment-fdi\">Foreign Direct Investment (FDI)<\/a> limit in Indian insurance companies <strong>from 74% to 100%.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>This will help in attracting stable and sustainable investment and aid achieve the goal of <strong>\u2018Insurance for All by 2047\u2019.<\/strong>&nbsp;<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Foreign reinsurers: <\/strong>The requirement of<strong> Net Owned Funds <\/strong>(includes equity capital, free reserves, balance in share premium account and capital reserves representing surplus) for <strong>foreign reinsurers<\/strong> is proposed to be <strong>reduced from Rs 5,000 crore to Rs 1,000 crore<\/strong>.\n<ul class=\"wp-block-list\">\n<li>It has been done to<strong> facilitate entry of more re-insurers,<\/strong> building greater reinsurance capacities in the country.&nbsp;<\/li>\n\n\n\n<li>This easing of norms is intended to draw competition in the segment currently dominated by the public sector General Insurance Corporation of India (GIC Re).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>More powers for LIC:<\/strong> Life Insurance Corporation of India (LIC) is being given greater operational freedom.\n<ul class=\"wp-block-list\">\n<li>It empowered LIC to set up new zonal offices without requiring prior government approvals, enabling faster expansion, improved administrative efficiency, and better regional oversight.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>More powers for IRDAI: <\/strong>The Insurance Regulatory and Development Authority of India (IRDAI) is set to receive enhanced enforcement powers, including the authority to disgorge wrongful gains made by insurers or intermediaries.\n<ul class=\"wp-block-list\">\n<li>This brings IRDAI\u2019s punitive capabilities closer to that of SEBI, which already has the power to recover illegally earned profits from violators.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>One-Time Registration System: <\/strong>The Bill proposes a one-time registration system for insurance intermediaries, removing the need for repeated approvals and simplifying compliance.&nbsp;<\/li>\n\n\n\n<li><strong>Ease of Doing Business:<\/strong> The threshold for requiring IRDAI\u2019s approval for the transfer of paid-up equity capital in insurance companies will be raised from 1% to 5%, allowing for smoother share transfers and reducing regulatory bottlenecks.<\/li>\n\n\n\n<li><strong>Penalties: <\/strong>The Bill introduces clear criteria for levying penalties, making enforcement more rational, transparent, and consistent across cases.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Omissions in the Insurance Amendment Bill<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>No composite licensing despite long-standing demand: <\/strong>The Bill does not allow composite licences, meaning insurers must continue operating in rigid units such as life insurers only in life insurance and general insurers only in non-life segments.\n<ul class=\"wp-block-list\">\n<li>This preserves a decades-old structure and prevents insurers from offering integrated insurance, despite growing consumer demand for comprehensive and convenient coverage.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>No relaxation in minimum capital requirements for new entrants: <\/strong>The Bill retains high entry thresholds of \u20b9100 crore for insurers and \u20b9200 crore for reinsurers.\n<ul class=\"wp-block-list\">\n<li>These capital norms continue to discourage smaller, regional, and niche insurers, preventing the entry of specialised players.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Several earlier reform proposals dropped: <\/strong>Provisions in earlier drafts\u2014such as allowing insurers to distribute other financial products, giving greater flexibility in investment norms, and permitting agents to sell policies of multiple insurers\u2014are missing.\n<ul class=\"wp-block-list\">\n<li>This restricts new revenue streams, limits consumer choice, and reduces efficiency in insurance distribution.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Silence on captive insurance companies: <\/strong>The Bill does not address the long-pending proposal to allow large corporations to set up captive insurers.\n<ul class=\"wp-block-list\">\n<li>This keeps India\u2019s risk-management framework underdeveloped and forces corporates to rely on external or overseas structures instead of regulated domestic captive insurance solutions.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance of the Bill<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>FDI limit raised to 100% as a major reform: <\/strong>Allowing 100% FDI is expected to attract substantial foreign capital into the insurance sector.<\/li>\n\n\n\n<li><strong>Access to global best practices and technology: <\/strong>Full foreign ownership will enable Indian insurers to adopt advanced underwriting models, digital claims platforms, and sophisticated risk-assessment tools.<\/li>\n\n\n\n<li><strong>Boost to innovation and competition: <\/strong>Increased foreign participation is likely to intensify competition, spur product innovation, and encourage the development of more customer-centric and technology-driven insurance solutions.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/new-insurance-bill-whats-in-whats-left-out-10418356\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">The Union Cabinet approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025.<\/li>\n<p><\/p>\n<p><strong>About<\/strong><\/p>\n<li class=\"ms-5\">The Bill seeks to revamp India\u2019s insurance framework, proposing changes to the: Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999.<\/li>\n<li class=\"ms-5\">Aim: Modernisation, wider coverage and stronger regulatory oversight.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/15-12-2025\/insurance-laws-amendment-bill\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-61679","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=61679"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61679\/revisions"}],"predecessor-version":[{"id":61867,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61679\/revisions\/61867"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=61679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=61679"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=61679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}