Kathmandu. The central government of India is preparing to make major reforms in the country’s insurance sector. The ‘Insurance Act Amendment Bill 2025’ has been passed by both the Houses of Parliament.
This bill will bring a significant change in the 100-year-old insurance law. The most important aspect of this bill is to increase the foreign direct investment (FDI) limit in the insurance sector from the current 74 percent to 100 percent.
Here are the top 10 attributes
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Affordable policies with good benefits: 100% FDI for foreign companies in the Indian market will increase the number of insurance companies globally. As a result, competition will increase in the market and insurance companies will make policies cheaper and better to attract customers. People will benefit from policies with higher benefits at lower premiums.
New Innovative Global Insurance Plan: The entry of global insurance companies in the Indian market will introduce new and improved policies. Innovative products like cyber insurance, pet insurance, and micro insurance protect customers from emerging risks. This will strengthen the financial plan and provide better protection to the customer.
Faster Claim Payment: Increasing competition among insurance companies worldwide will improve the quality of service. New technologies such as AI÷ML will speed up claim processing and ensure timely payment. The insured will no longer have to wait for claims and will receive immediate financial assistance when needed.
More protection for customers: The new law empowers IRDAI to refund illegally earned profits from companies that violate the rules. This will prevent customer fraud and mis-selling and provide tighter control over insurance companies.
More people have access to insurance: With the removal of the FDI cap, insurance companies will expand their reach to rural and remote areas. This will strengthen the distribution network and provide insurance policies on easier terms to a large previously uninsured population.
Improving customer service: The entry of international companies will improve customer service and allow companies to provide services to global standards. Transparency will increase. This will help in quick resolution of customer complaints and correct policy information. This will increase customer satisfaction.
Improving insurance agent behavior: The ‘one-time registration’ system for insurance agents will reduce administrative work. So that they can focus on providing good advice to the customer. This will make agents more efficient and customer-centric and help the customer choose the right policy.
Greater freedom for LIC: LIC will now have the freedom to open new regional offices and take decisions without government approval. This will enable LIC to compete with private companies and take quick decisions based on market requirements. The insured will provide better and faster service.
Insurance companies financially strong: 100% FDI will allow foreign companies to bring in more capital. This will increase financial stability in the Indian insurance sector. With the additional capital, companies will be able to cover larger risks and meet claim obligations. They will ensure the safety of the insured and claim payment.
Economic Growth and Employment: Foreign investment will increase employment opportunities in the insurance sector and related sectors. This will strengthen economic stability. It will increase the gross domestic product (GDP) and provide security to the common people in times of crisis. The phrase “insurance for all, protection for all” reflects the broader benefits of this bill.
