Kathmandu. The Insurance Laws (Amendment) Bill, 2025, passed by the Rajya Sabha on December 17, is set to bring structural changes in India’s insurance sector. This will pave the way for easier entry and stronger regulatory oversight for large foreign-invested reinsurance companies. <\/p>\n
The bill amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999 to increase the foreign direct investment (FID) limit in insurance companies from 74% to 100%. <\/p>\n
According to CareEdge Ratings, India’s move will reduce capital constraints for insurance companies. As securities requirements increase, this could support a strengthening of the insurance sector. <\/p>\n
Out of about 60 insurance and reinsurance companies operating in India, six small companies have already met the 70% to 74% foreign ownership threshold. The higher limit for these companies allows existing foreign promoters to inject more capital without changing the ownership structure. About 11 mid-sized insurance companies, with about 49% foreign shareholding, are also expected to benefit from a larger capital pool. <\/p>\n
The bill reduces the net ownership fund requirement for foreign reinsurance companies from Rs 5,000 crore to Rs 1,000 crore. This lowers the entry barriers for international and specialized reinsurance companies. <\/p>\n
CareEdge can increase competitiveness in the domestic market and expand reinsurance capacity. It will ensure that the capital needed to support local insurance companies remains in India. <\/p>\n
Regulatory flexibility has been extended to insurance companies operating in Special Economic Zones (SEZs) and International Financial Services Centres (IFSCs). This allows the central government of India to customize insurance regulations for these sectors. This will facilitate cross-border insurance activities and growth of IFSC as a regional insurance centre. <\/p>\n
Another major change will remove the minimum paid-up capital requirement of \u20b9100 crore for insurance cooperatives. The objective is to promote community-based insurance models, especially in agricultural, dairy and regional clusters, and improve financial inclusion in underserved areas. <\/p>\n
Sanjay Agarwal, Senior Director, CareAge Ratings, said the reforms strengthen the insurance framework by improving access to capital, enhancing regulatory oversight and reducing operational bottlenecks. “The higher FDI limit provides an opportunity for incremental capital infusion, which will support growth and resolution and is likely to improve insurance access and market strength over time,” he said. \u2019<\/p>\n
However, CareAge pointed out that many of the proposed reforms, including composite licensing, easier capital standards for new insurance companies, captive insurance, larger distribution structures and changes to investment standards, are not part of the current bill and could be considered in the future. \u2013 Agency<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The Insurance Laws (Amendment) Bill, 2025, passed by the Rajya Sabha on December 17, is set to bring structural changes in India’s insurance sector. This will pave the way for easier entry and stronger regulatory oversight for large foreign-invested reinsurance companies. The bill amends the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, […]<\/p>\n","protected":false},"author":16,"featured_media":222789,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45044,45159],"tags":[],"class_list":["post-282559","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-international-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/282559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=282559"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/282559\/revisions"}],"predecessor-version":[{"id":282560,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/282559\/revisions\/282560"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/222789"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=282559"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=282559"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=282559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}