India Proposes Full Foreign Ownership in Insurance Major Reforms Ahead

Insurance Bill Proposes 100% FDI to Accelerate Growth in the Insurance Sector

The government has taken a major policy step toward overhauling India’s insurance framework by listing the Insurance Laws (Amendment) Bill for discussion in the winter session of Parliament. The proposed legislation outlines extensive reforms aimed at expanding foreign participation, modernising regulation, and improving insurance accessibility for millions of citizens.

Full Foreign Ownership to Attract Global Capital

At the heart of the amendments is the proposal to increase the FDI cap from 74% to 100% , a commitment earlier outlined in the Union Budget 2025–26. The reform is expected to bring long-term stability and inflows of global capital, particularly beneficial for new-age insurers and growing segments like digital-first insurance platforms. The revised cap will apply to companies that retain their premium income entirely within India, reinforcing financial discipline and domestic investment.

Key Changes Across Three Core Laws

The bill proposes amendments to the Insurance Act 1928 , the LIC Act 1956 , and the IRDAI Act 1999 . These updates aim to provide a more flexible regulatory environment, ease compliance barriers, and support deeper penetration in rural and underserved regions. By simplifying licensing and operational procedures, the reforms seek to make insurance products more affordable and accessible.

Composite Licences for Multi-Line Operations

A transformative feature of the bill is the introduction of composite licences , allowing insurers to operate life, health, and general insurance businesses under a single regulatory umbrella. This structural shift is expected to reduce duplication, increase efficiency, and promote innovative product bundles—key to India’s goal of achieving “Insurance for All by 2047.”

Exam Oriented Facts

• Proposed FDI rise: 74% → 100%

• Composite licences: life + health + general under one permit

• IRDAI may reduce entry capital to ₹50 crore for select entities

• Net Owned Funds requirement for foreign reinsurers may become ₹1,000 crore