Nirmala Sitharaman tables 'Sabka Bima Sabki Raksha' insurance amendment bill in Parliament

Finance Minister Nirmala Sitharaman introduced the 'Sabka Bima Sabki Raksha' Insurance Laws (Amendment) Bill, 2025, in Parliament on Tuesday. The proposed law -- aimed at strengthening policyholder protection, deepening insurance penetration and accelerating growth in the domestic insurance space -- seeks to amend three decades-old laws: the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. Once enacted into law, the proposed legislation will remove the current limits on commission and remuneration in the Insurance Amendment Bill.

The decisions on aspects like commission and remuneration will be left to insurance regulator IRDAI.

'Sabka Bima Sabki Raksha' Bill aligns with Centre's 'Insurance for All by 2047' vision

• The proposed law is aligned with the Narendra Modi government's long-term 'Insurance for All by 2047' vision while improving the ease of doing business in the insurance space.
• It contains a provision to raise foreign direct investment (FDI) on domestic insurance businesses from the existing 74 per cent to 100 per cent. The government aims to attract steady, long-term foreign capital in the domestic insurance market while facilitating technology transfer and enhancing insurance penetration as well as social security.
• In a move aimed at enhancing consumer protection in the space, the Bill proposes the setup of a Policyholders' Education and Protection Fund to focus on promotig insurance awareness and safeguarding the interests of policyholders.
• It also proposes to grant IRDAI more teeth to combat disgorging wrongful gains. This move will enable the regulator to recover illegal or unfair gains made by insurers and intermediaries.
• It provides a legal framework for the creation and effective use of digital public infrastructure in the insurance sector -- a move seen promoting innovation while boosting data privacy and cybersecurity.
• It proposes one-time registration for insurance intermediaries.

• The Bill also seeks to raise an existing limit on an insurance company's equity investment in another company from 1 per cent to 5 per cent of the target company's total paid-up equity capital. Currently, under IRDAI guidelines, insurance firms can hold no more than 1 per cent equity in a single company.
• It also provides greater operational autonomy to state-run LIC, allowing the insurance giant to set up zonal offices and align its overseas operations with the laws and regulations of respective jurisdictions.
• The bill proposes to introduce a standard operating procedure (SOP) for regulation-making under the IRDAI Act -- a move set to improve regulatory governance.
• It also proposes the establishment of a transparent and rational framework for levying penalties with clearly defined factors to guide fair imposition.