Topic 7: INSURANCE: GETTING THERE

November 2025 marked a turning point for India’s insurance sector as the government prepared to introduce the Insurance Laws (Amendment) Bill 2025 in the sixth session of the 18th Lok Sabha. The proposed bill signalled the most comprehensive reform of insurance legislation in decades, aiming to modernise the Insurance Act (1938), LIC Act (1956) and the IRDAI Act (1999). The most notable change is the proposal to raise FDI in insurance from 74% to 100%, a move expected to attract substantial foreign capital, global expertise and advanced technology into the Indian market. This is likely to improve product variety, service quality, and overall penetration levels, which remain relatively low in India compared to global standards. The bill also proposes composite licences, allowing insurers to offer both life and non-life products under a single entity. This is expected to reduce operational barriers, improve efficiency and encourage bundled and customised insurance solutions. Capital entry norms are set to be drastically reduced – from ₹100 crore to a lower threshold for insurers and from ₹5,000 crore to ₹500 crore for reinsurers. These changes could open the door for specialised, niche players such as health-focused or climate-risk insurers. The introduction of captive insurers for corporates, perpetual registration for intermediaries, and the ability for agents to sell products from multiple insurers further points toward a more flexible and competitive ecosystem. On the regulatory front, the insurance industry was also influenced by parallel developments in the mutual fund space. While SEBI’s consultation on mutual fund regulations raised broader concerns on fee transparency, IRDAI extended the deadline for feedback on its proposed changes to November 24. Additionally, ULIP taxation norms were tightened, with policies having annual premiums above ₹2.5 lakh losing tax exemption under Section 10(10D), discouraging their use purely as tax-saving investment tools by high-net-worth individuals. Together, these reforms support the government’s long-term vision of “Insurance for All by 2047,” promoting higher penetration, greater innovation, increased competition and a more resilient, globally aligned insurance industry.



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