Insurance Amendment Bill to ensure accessibility, affordability for all: FM

Nirmala Sitharaman further noted that India needs further capital infusion into the insurance sector

Union Finance Minister Nirmala Sitharaman on Tuesday said the proposed 100 per cent foreign direct investment (FDI) in the insurance sector will ensure accessibility and affordability of insurance to the citizens. 

“The insurance law will ensure accessibility, affordability of insurance to our citizens, meeting with the goal and objective of insurance for all,” Sitharaman said in Lok Sabha while replying to the discussion on the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025. Later, the Lok Sabha passed the bill. 

In her address, Sitharaman said an entity engaged in the business of insurance will have to categorically use the name insurance or assurance to check misspelling of policies.  “Similarly, an insurance intermediary will have to necessarily indicate the nature of its business/services to identify itself with the kind of services it extends,” she added. 

Sitharaman said that India needs further capital infusion into the insurance sector and the proposed removal of the upper cap on FDI in the insurance sector will be a significant enabler in meeting these objectives. “This will ensure that we benefit from better technology, world-class risk assessment models and the best insurance products available anywhere in the world,” Sitharaman said. 

The bill also proposes to enhance the ease of doing business for insurance companies and intermediaries, thereby creating a conducive business environment for these entities, she added. “We are standardising the regulation-making process by introducing Standard Operating procedure for regulation making and mandatory public consultation on all regulations by Irdai to ensure that the process is consultative and transparent,” she added. 

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, seeks to amend Insurance Act, 1938, Life Insurance Corporation Act, 1956, and Insurance Regulatory and Development Authority Act, 1999. 

FM also noted that the government is providing autonomy to LIC to open Zonal Offices and aligning compliance for its foreign offices with the laws and regulations of their respective jurisdiction. 

“We are empowering Irdai to disgorge wrongful gains from insurers and intermediaries,” she added. 

The 56th GST Council Meeting held in September had unanimously agreed to remove GST on individual life and health insurance premiums. 

“There is now a 0 per cent GST rate (down from 18 per cent) on all individual life insurance policies and individual health insurance policies to make them more affordable for the common man. This “nil GST” on individual health and life insurance is a significant tax relief that directly reduces the cost of premiums for policyholders, encouraging more people to insure themselves and their families,” she added.