Insurance Amendment Bill likely in Monsoon Session

The Centre may introduce the much-anticipated Insurance (Amendment) Bill in the Monsoon session of Parliament, with officials indicating that the draft bill was in the final leg of internal deliberations.

The bill is likely to be put up for approval of the union cabinet by April-end, the sources added. 

The bill is expected to bring significant reforms to India's insurance sector, including raising the foreign direct investment (FDI) limit from 74% to 100% for companies that reinvest premiums within the country.

This move comes at a crucial time as the government is in the process of selecting a new Insurance Regulatory and Development Authority of India (IRDAI) chairperson following the end of Debasish Panda’s tenure. The government has invited applications for the position of the next chairperson of the IRDAI, with April 6, 2025, set as the deadline for submissions.

Sources tell Business Today TV that over the past two years (2022-24), FDI inflows into India's insurance sector have totalled Rs 82,000 crore, driven by the existing FDI ceiling and regulatory provisions on dividend repatriation. It is anticipated that allowing 100% FDI could result in a 10-15% increase in foreign investment in the sector, further strengthening India’s insurance landscape.

Key amendments in the bill include provisions for composite insurance licensing, allowing a single entity to offer both life and general insurance. Additionally, the bill proposes relaxing existing regulations on dividend repatriation and management appointments for foreign-owned insurance firms.

The bill will amend three key legislations—the Insurance Act, the IRDAI Act, and the LIC Act—aiming to streamline industry regulations, boost capital inflows, and enhance insurance penetration in India. The IRDAI is already drafting operational guidelines to ensure a smooth transition once the bill is enacted, reinforcing regulatory certainty for insurers, agents, and policyholders alike.